Sunday, October 29, 2006

Praiseworthy Labour Productivity

Brian Ferguson, of Canadian Economist Blog, sent me a reference to National Post (Canada) Financial Post section (28 October), containing an interesting article loosely related to Smith’s productive/unproductive dichotomy, perhaps one of his half-finished, if insightful, ideas, and an advance on the Physiocrats’ notion of ‘productive’ and ‘sterile’ labour, supposedly defined by the boundary between agriculture and manufacturing output.

From: ‘Moral Sentiments and MP3’ by Peter Foster, National Post (Canada):

Like the declamation of the actor, the harangue of the orator, the tune of the musician, the work of all of them perishes in the very instant of its production.” Adam Smith: The Wealth of Nations.

There's nothing like going back to good old Adam Smith when you need a little perspective on a modern issue. Take music file-sharing.

Smith, in the above passage, published in 1776, was discussing "unproductive" labour, a category in which he included churchmen, lawyers and physicians, as well as "players, buffoons, musicians, opera-singers, opera-dancers etc." He contrasted it with the "productive" labour of manufacturers.

He did not suggest that singers or musicians (or even buffoons or lawyers) produced nothing of value, it was just that their work didn't result in anything that "fixes and realizes itself in some particular subject or vendible commodity."
Fast forward (a profoundly significant phrase) just over 100 years, to 1877, and Thomas Edison's phonograph changed the world of singers and musicians forever.

Humans -- and I hope this doesn't shock anybody out there -- are only provisionally moral creatures who show a remarkable ability to justify their actions and interests. This particularly applies to young people, who need to be "socialized" (which means inducted into their society's moral values, not turned into socialists!).

Adam Smith noted that we possessed "moral sentiments," but that they need a good deal of social education, and are so imperfect that they ultimately have to be overseen by laws. Despite the wonders of modern technology, that fact hasn't changed at all since 1776.

Smith’s model of labour as a factor in production was relevant for his time and his purpose – what caused net product, or growth in wealth, the production of ‘necessaries and conveniences’ of life? He thought of these as tangible products (food, clothing, shelter, domestic goods and chattels), wrought from nature by labour in combination with the factors of land and stock. In the form of circulating capital they reproduced rent, wages and profit (rewards to the three factors), over and above what they produced in the previous period. The net product was used in the next round – the ‘wheel of commerce’ – to augment the next round’s production. This left many ‘awkward corners’ and gaps, though the model was sound enough on its own terms as a simple growth model.

Unproductive labour for Smith produced consumables that did not reproduce themselves – the domestic servant, etc., - though they enabled productive labour to function, and the class of the idle rich, including landlords and prodigals of all classes, dissipated potentially reproductive capital in frivolous consumption, compared to their productive potential (or opportunity cost) in commerce on own account or by lending to others at interest.

Leakages from the ‘great wheel’ lowered net product and thereby lowered the growth rate below what it could become, but some unproductive labour was inescapably essential (the appropriate roles of government in defence, justice, education, public works and the collection of taxes). And that gave Smith’s analysis his sense of urgency – leakages above the essential (‘without justice society would crumble’, ‘defence is more important than opulence’, and so on) delayed the advance to opulence, including for the overwhelming majority of a people who were trapped in poverty, uneducated in the main, with high infant mortality (2 children surviving out of six or more – 19 for a mother in a Highland village he quoted) and short life spans.

But the contradictions inherent in non-productive, productive in this strictly limited sense were not resolved by Smith (he was, after all, writing in the mid-18th century). After the dead-end of the Physiocrats, he represented a step forwards.

The basic issue is not one of ‘consumed in an instant’, but are these goods and services exchanged at market prices? Smith was before the time when this became an obvious distinction (think of Eltis and ‘Too Few Producers’) and there was no way his distinction could be salvaged in the way he stated it.

However, the generation of net product as the potential source of growth is part of the solution to the problem of his too narrow distinction.

On the last paragraph I quoted from Peter Foster, he shows familiarity with Smith’s ‘Moral Sentiments’. Humans are ‘only provisionally moral creatures who show a remarkable ability to justify their actions and interests’ and ‘they need a good deal of social education, and are so imperfect that they ultimately have to be overseen by laws.’

Precisely! Smith did not assert, unlike his mentor, Francis Hutcheson, who believed that we are born with an innate moral sense, like the other senses. Smith asserted that we develop a moral sense from contact and interactions with adults as infants, school friends as children and contemporaries as co-adults. These are the ‘mirrors of society’ from whom we learn acceptable and unacceptable behaviours, and what is praiseworthy in our conduct. The latter is the ambition of all people imbued with moral sentiments. Mere praise can be a chimera, a false notion.

In this instance, Peter Foster’s article is praiseworthy, as is Brian Ferguson's sending it to me.

[See Peter Foster’s article at:]
Visit Brian Ferguson's Blog at:


Post a Comment

<< Home