Did Adam Smith really accomplish anything of substance?

Here is an excerpt from the book about a certain enterpreneur Richard Arkwright in late 18th Century England whom ADAM SMITH wanted to correct:

"But, having constructed his machine, he found it was not so easy to staff it. Arkwright was forced to turn to children-their small fingers being active. Children adapted themselves more readily to the discipline of factory life. The move was hailed as a philanthropic gesture-would not the employment of children help to alleviate the condition of the unprofitable poor?

Now, tell me that doesn't sound like one of the modern arguments for Mexican illegal workers and Chinese sweatshops? Smith was against it.

And this is for people that claim market always takes care of wages:

Smith lived at a time when conditions were so poor with regard to medical healthcare and stuff that a woman could give birth to 20 kids and end up with only 2 surviving. So, Smith claimed when wages were low, parents would not be able to provide a lot of good care for their children and a lot of them would die. This would cause a decrease of working population and employers would have to raise the wages while looking for workers. With higher wages, parents would take care of their children better and population would increase with fewer premature deaths.

This is how Smith felt wage regulation and the market system would co-exist. Quite barbaric if you ask me.

By the way, Smith was not in favor of corporations as he felt they were too large and powerful to care about consumer’s needs.

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Originally Posted by Big

Here is an excerpt from the book about a certain enterpreneur Richard Arkwright in late 18th Century England whom ADAM SMITH wanted to correct:

"But, having constructed his machine, he found it was not so easy to staff it. Arkwright was forced to turn to children-their small fingers being active. Children adapted themselves more readily to the discipline of factory life. The move was hailed as a philanthropic gesture-would not the employment of children help to alleviate the condition of the unprofitable poor?

Now, tell me that doesn't sound like one of the modern arguments for Mexican illegal workers and Chinese sweatshops? Smith was against it.

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Yes, it does. I've done some study on the maquiladoras (factories on the Mexican side of the border often owned by U.S. corps), and they are known for recruiting women (not men) from the interior, among other things, because women are known to be more dexterous with their hands--better to do the assembly work of the manufacturers. Of course, they're just cogs in the profit making machinery.

The modern corporation as we know it, was not known in Smith's time. Back in the days of old, a corporation had to get a specific charter from the government. And so the first one, as I recall, was the Royal Dutch Co. or something like that--the one that would run other countries like India. Corporations still need charters today but it's a mere formality. But, yes, I think I've read that before, that Smith did not favor corporations.

Smith is still relevant I'd say because he constructed a theory on why and how the market works--plus he was probably the first to attempt to formulate such a theory. We know there are some problems, but the basic idea is still relevant, and is widely accepted throughout most of the world--certainly in the West.

matclone,

Can you please address the regulation of the wages issue I posted in my previous post?

To me Smith’s relevance to modern Capitalism is like a 1960s cycling expert’s training program for a modern elite cyclist, training is good but perhaps some drugs do the trick.

Big, I'm not sure I understand what Smith said about this. I fully understand the "free market" concept that wages will take care of themselves--tit for tat--that it all balances out fairly in the end. It sounds like you're saying Smith had a somewhat different idea. Of course Marx had different ideas on this as well. Smith's theories are the basis for classical economics, which predominates in U.S. schools, and I suspect most of the western world. That's why they are relevant.

Matclone,

That is the thing! Smith did say wages will take care of themselves. However, why did he say so? His theory is outlined in that post I made. He felt survival or lackthereof of children is what made wages increase and decrease, an impossible idea in today’s world.

You see, a few times in this book the author states that often those that Smith had criticized the most, the capitalists that took portions of Smith’s statements and engineered them for their own agendas, were the people that claimed Smith was the saint. So, the West might have taken Smith’s statement that wages will take care of themselves, BUT they largely ignored his reasoning which could apply to 18th Century but not to 21st Century.

Are you sure that wasn't just his example of how wages would balance? I mean, I don't know. A modern economist of the Chicago School (Milton Friedman) might argue that you have to pay enough wages to attract the right kind of employee--but not too much or you'll be undercut by your competition. And so, we get this thing you mentioned: they'll say, look, the girl's working for 30 cents an hour--which is 15 more cents than she would have been paid elsewhere (aside: assuming her only choice in life was to work in a factory)--she's rich by her usual standard--what could be more fair than that?