In my second to last post I argued that implementing Smith’s recommendation that nations should specialize in their low-cost industry, export the surplus, and import whatever can be more cheaply made elsewhere (“If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage”, The Wealth of Nations, 2000 Modern Library edition, p. 486) seemed to require that individuals be forced (or otherwise “encouraged”) to give up specializing in what they do best, and rather specialize in what their country does best. This requirement would, I suggested, unsatisfactorily undermine a basic good attaching to individuals’ being free to engage in a chosen profession; and I observed that this unsatisfactory consequence seems to be playing out in both developed and undeveloped nations operating under a capitalist paradigm. In my last post I then considered whether the loss of this good might be compensated by an increase in another good (namely, overall income and prosperity), and (drawing upon facts presented in David McNally’s Another World is Possible) I argued that, as an empirical matter of fact, this benefit does not seem to attach to the sort of neoliberal free trade currently being practiced.
A helpful reader offers another response on Smith’s behalf; namely, that Smith would not have endorsed the idea that government should interfere in the choice of individuals as regards their occupation, and that to the extent that free trade as currently implemented involves this sort of coercion, it departs from “classical” capitalism:
Capitalists do not claim that specialization should be forced on anyone. To the contrary, we claim that the division of labor, the highest form of cooperation, is naturally occurring and cannot be centrally planned. I don't know how I logically could claim to support free trade and then turn around saying that someone shouldn't be able to freely trade his or her labor.
That is the very type of state planning the classical economist railed against. And it's the very reason that free traders consider these agreements (NAFTA, etc.) as nothing more than impersonations of the real thing. They attempt to gain controls over imports and exports, exchange rates, and any number of regulations. They're a start, but genuine free trade wouldn't be in the form of international agreements. It would look like the trade that exists between states.
That Smith didn’t intend for free trade, as he endorsed it, to involve state coercion is clear from this passage, which occurs directly after his “invisible hand” passage (p. 485) (though it should be noted that this passage occurs in a discussion of whether the state ought to encourage one or other very general sort of industry---e.g., agriculture vs. manufacturing---and so isn’t, strictly speaking, addressing the fine-grained level of choice in profession with which I was concerned. But close enough).
What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted to no council and senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.
I’ll take this passage to support my reader’s remark that classical capitalists think that, just as local division of labor is “naturally occurring”, so too would (or should) be international division of labor. Now, as I noted and as my reader agrees, the international division of labor presently being implemented is not occurring “naturally”. So in a way that gets Smith (and classical capitalism) off the hook: the problem I am concerned with (concerning individuals being forced into certain occupations) lies in the neoliberal implementation of capitalism, not capitalism itself.
Or does it? The idea of “naturally occurring” division of labor makes sense when Smith is talking about tailors and shoemakers, each going about their chosen, fulfilling business, and trading the surplus fruits of each other’s labors (either directly, or via monetary exchange). But it’s worth recalling what sort of division of labor Smith really has in mind as supporting the wealth of nations, as laid out in his opening chapter, ‘Of the Division of Labour’.
Smith starts out with a powerful thesis:
The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour. (p. 3)
Since (as per his introduction), it is the productive powers of labor that form the basis for the wealth of nations (“The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour, or in what is purchased with that produce from other nations”), division of labor is thus a (the?) crucial foundation of his economic system---that is, of classical capitalism. Smith goes on:
The effects of the division of labour, in the general business of society, will be more easily understood, by considering in what manner it operates in some particular manufactures.
He then gives an example in terms of what he calls “trifling manufactures” which are destined to supply the small wants of but a small number of people. Of these he says
The whole number of which must necessarily be small; and those employed in every different branch of the work can often be collected into the same workhouse, and placed at once under the view of the spectator.
Hmmm. Working in the workhouse under the view of the “spectator” doesn’t sound very appealing, but let’s see what Smith has in mind:
To take an example, therefore, from a very trifling manufacture […] the trade of the pin-maker; a workman not educated to this business […] nor acquainted with the use of the machinery employed in it […] could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it a the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations […]. But though they were very poor […] they could, when they exerted themselves, make among them about twelve pounds of pins in a day.
This kind of manufacture produces goods that no individual could produce on their own:
Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this particular business, they certainly could not each of them have made twenty, perhaps not one pin in a day […]
Smith goes on to generalize from this case:
In every other art and manufacture, the effects of the division of labour are similar to what they are in this very trifling one […].
This great increase of the quantity of work, which, in consequence of the division of labour […] is owing to three different circumstances; first, to the increase in dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many. […]
[T]he improvement of the dexterity of the workman necessarily increases the quantity of the work he can perform; and the division of labour, by reducing every man’s business to some one simple operation, and by making this operation the sole business of his life, necessarily increases very much the dexterity of the workman. […]
So, notwithstanding the reference, proximal to the “invisible hand” argument and the argument for international free trade, to the division of labor between tailors and shoemakers, what Smith really has in mind as the foundation for the wealth of nations is a division of labor that, in its purest form, involves “reducing every man’s business to some simple operation, and making this operation the sole business of his life”.
Two points are now worth noting.
First, it turns out that the question of whether classical capitalism would involve individuals’ being forced into certain occupations (this question already being answered in the affirmative, as an empirical matter, for neoliberal capitalism as presently implemented) turns out to be prior to of the international free trade issue. For this question can be antecedently raised as regards national division of labor, of the sort that Smith regards so highly.
Second, one has only to consider the description of Smith’s paradigm case of such national division of labor in order to reasonably infer that some degree of coercion must be involved for individuals to end up engaging in this sort of “profession”.
Most people reading this are probably lucky enough to not be working in a factory. But imagine doing nothing but one’s small boring corner of efficient production---say, stretching out wire for pins---for however many (unspecified---but presumably eight or more) hours a day, complete with some intimidating “spectator” keeping watch over you. This sort of “division of labor”, unlike the sort associated with individuals becoming tailors, shoemakers, or whatever, is not, I suggest, something that “naturally occurs”. Only under duress would humans choose to be both bored and intimidated for half or more of their waking hours.
I submit, then, that, notwithstanding Smith’s protestations to the contrary, the sort of division of labor which serves (by Smith’s own lights) as the foundation for classical capitalism, wherein each person’s business is reduced to “some simple operation”, does not “naturally occur” (since no one in their right mind would choose to do such work), but rather must be the outcome of duress or coercion of some sort. Hence the problem for capitalism that I initially located in Smith’s argument for international free trade---namely, that it requires that individuals specialize in something other than what they would choose to specialize in--- is independent of that argument, and is rather more foundationally located in Smith’s embrace of (what I’ll call) industrial division of labor (with the understanding that this includes agricultural industry).
But what sort of duress or coercion is at issue when individuals are led to engage in industrial division of labor, one might ask? Tune in next week for discussion.