Wednesday, January 18, 2006

Reply to Rothbard on Adam Smith - 3

Murray Rothbard asserts the following unfair criticism and an elementary error:

In addition, Smith failed to apply his analysis of the division of labour to international trade, where it would have provided powerful ammunition for his own free trade policies. It was to be left to James Mill to make such an application in his excellent theory of comparative advantage. Furthermore, domestically, Smith placed far too much importance on the division of labour within a factory or industry, while neglecting the more significant division of labour among industries.”

It is not central to my replies to Rothbard on Smith, but it typifies his rhetoric, that he counts as a ‘failing’ in a predecessor, that another political economist 50 or more years after he died, had ‘been left’(?) to apply a theory which his predecessor had not created on his own account. That John Stewart Mill elaborated on a concept on the back of David Ricardo’s work is highly commendable (that is how science progresses and evolves), but if we are to blame all predecessors for not anticipating our insights in the centuries that follow them (and us!) we must have a pretty jaundiced view of the practice of science.

But look closely at the main charge against Smith. Rothbard asserts he ignored the division of labour in ‘international trade’ and ‘the more significant division of labour among industries.’ What breathtaking forgetfuness on his part – it cannot possibly be caused by Rothbard’s ignorance, for his reputation as a major scholar in economic science rightly remains untarnished. The famous ‘pin factory’ (of which more later) was not the sole reference to the division of labour in “Wealth of Nations”. It was only one ‘trifling’, one-paragraph example, chosen I suspect to illustrate the principle of the division of labour and not to exhaust it (WN I.i.3, pages 14-15).

In the very next paragraph(!) (WN I.i.4: page 15) Smith writes:

In every other art and manufacture, the effects of the division of labour are similar to what they are in this very trifling one… The division of labour, however, so far as it can be introduced, occasions, in every art, a proportionable increase of the productive powers of labour. The separation of the different trades and employments from one another, seems to have taken place, in consequence of this advantage. This separation too is generally carried furthest in those countries which enjoy the highest degree of industry and improvement; what is the work of one man, in a rude state of society, being generally that of several in an improved one…. The labour too which necessary to produce any one complete manufacture, is almost always divided among a great number of hands. How many different trades are employed in each branch of the linen and woollen manufactures, from the growers of the flax and the wool, to the bleachers and smoothers of the linen, to the dyers and dressers of the cloth!”

For Smith his survey of the application of the division of labour in mid-18th century Scotland, and what we now know, but nobody did at the time, was only the beginning of a deepening of commerce and industry on a scale unprecedented in all of history that has not stopped yet, concerned the ‘downstream’ processes of product groups (flax and wool) because these were the most evident examples of the division of labour at work in Smith's day. He did not ‘neglect’ the significance of the division of labour ‘among’ industries at all. He wrote about them!

Only seven paragraphs on (WN I.i.11, pages 22-24), Smith develops his lesser known (to those who rely on abridgements and third-hand accounts of what Smith wrote, a charge nobody could make against Rothbard) example of the division of labour, that of the manufacture of the ‘accommodation’ of the ‘common artificer’, which utilises a ‘number of people’ different industries who contribute ‘a part’ to procurements of the common labourer. These people must ‘join their different arts in order to complete even this homely production’, writes Smith, and goes on to elaborate on the different industries ‘in distant parts of the country’ and ‘a great multitude of workmen’ needed to produce by their ‘joint labour’ the common labourer’s woollen coat.

These different industries, allegedly neglected by Smith, include shepherds, weavers, fullers, ‘many merchants and carriers’, commerce and navigation, ship-builders, sailors, sail-makers, rope makers, drugs for dyers (‘from the remotest corners of the world’, introducing an international trade element into his discourse, which Rothbard calls his ‘failing’), tool-makers, makers of ‘complicated machinery’ for ships, millers, and looms, even the ‘shears’ that ‘clip the wool’, miners of coal and ore, builders of furnaces for smelting, timber fellers, charcoal burners, brick-makers,, brick-layers, furnace men, mill-wrights, forgers, smiths, all ‘joined in their different arts in order to produce them’.

Smith, having mentioned the common labourers' other requirements in dress, furniture, shirts, shoes, bed, kitchen grate, tables, furniture, knives and forks, earthen and pewter plates, bread, beer, and glass windows, concludes:

If we examine, I say, all these things, and consider the variety of labour employed about each of them, we shall be sensible that without the assistance and co-operation of many thousands, the very meanest person in a civilised country could not be provided, even according to, what we very falsely imagine, the easy and simple manner in which he is commonly accommodated” (WN I.i.11: pages 22-4).

I shall return to a final aspect of the division of labour according to Rothbard in my next instalment and then move on to other aspects of Rothbard’s myths about Adam Smith.

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