The Real Voice of Adam Smith
                   		Michael Hauben

[Note: numbers in the text refer to pages in "An Inquiry Into the Nature and 
Causes of The Wealth of Nations" by Adam Smith, Modern Library, 1965]

    An Inquiry Into the Nature and Causes of The Wealth of Nations focuses 
on the wealth of nations; which is the fund the "annual labour of every 
nation" produces. (Modern Library, 1965, p. ivii) From the very 
introduction of The Wealth of Nations, Adam Smith concentrates on the 
laborer, the person who's labor constitutes the wealth of the nation. A 
common thread throughout the book that has received very little emphasis 
is Smith's empathy for the common worker. Smith believes that there should 
be a fair relationship between employers and workers.

    The interests of society are Adam Smith's interests. Smith's empathy 
for the common laborer stream from the interests of society. In Book I, 
Chapter XI, Smith equates the interests "of those who live by wages" with 
"the interest of the society." (249) However the "interest of this third 
order," which is "those who live by profit," or manufacturers, "has not 
the same connection with the general interest of the society" as do the 
workers or landowners. (250) Smith explains these differences by writing 
"As their thoughts, however, are commonly exercised rather about the 
interest of their own particular branch of business, than about that of 
the society." (250) Interests that sway from those of society's, often 
hurt society. Smith writes:

    It comes from an order of men, whose interest is never
    exactly the same with that of the public, who have
    generally an interest to deceive and even to oppress
    the public, and who accordingly have, upon many occa-
    sions, both deceived and oppressed it. (250)

Smith is critical of this deception and oppression. Smith equates

    a well-governed society as one where the whole of the people gain
    from the society's production. 

In the beginning of Book I, Adam Smith writes:

    It is the great multiplication of productions of all the
    different arts, in consequence of the division of labour,
    which occasions, in a well-governed society, that universal
    opulence which extends itself to the lowest ranks of the
    people. (11)

This differentiates from when only the manufacturers or certain classes of 
society gain from society's production. A society's improvement as a whole 
is linked to "what improves the circumstances of the greater part" of 
society. (78) Smith states that "servants, labourers, and workmen of 
different kinds" (78) make up the greater part of every political society. 
He finishes this sentiment by writing, "No society can surely be 
flourishing and happy, of which the far greater part of the members are 
poor and miserable." (78) His statements point out that high earnings of 
labor are an advantage to society.

    The attempts the manufacturing class use for their advantage, in total 
disregard of the workers, hurts the society since the wealth of society is 
made up of the production from the great collection of individuals who are 
the workers. In the striving for employer's "personal" gain, the 
individual workers are hurt and thus society is hurt. Adam Smith is thus 
against inflated profits which the manufacturing class always seek. He is 
vehemently opposed to the opportunities allowed to monopolies. Smith 
writes:

    The monopolists, by keeping the market constantly understocked, by 
never fully supplying the effectual demand, sell their commodities much 
above the natural price, and raise their emoluments, whether they consist 
in wages or profit, greatly above their natural rate. (61)

    In the search for greater and greater profits, companies neglect or 
purposely attempt to keep wages down and raise prices so as to collect 
higher and higher profits. Smith reports this in the following:

    People of the same trade seldom meet together, even for
    merriment and diversion, but the conversation ends in a
    conspiracy against the public, or in some contrivance
    to raise prices. It is impossible indeed to prevent
    such meetings, by any law which either could be execut-
    ed, or would be consistent with liberty and justice.
    But though the law cannot hinder people of the same
    trade from sometimes assembling together, it ought to
    do nothing to facilitate such assemblies; much less to
    render then necessary. (128)

    When the manufacturer's interest is for the highest profits, the 
worker is the first to be affected by this policy. Among the first place a 
manufacturer can gain is by increasing the percentage of income that goes 
to profit while lowering the percent that goes to the worker as wages. 
Smith explains this conflict:

    What are the common wages of labour, depends every
    where upon the contract usually made between those two
    parties, whose interests are by no means the same. The
    workmen desire to get as much, the masters to give as
    little as possible. The former are disposed to combine
    in order to raise, the latter in order to lower the
    wages of labour. (66)

    The manufacturer is frustrated by the worker's contradictory role. On 
the one hand, the worker's labor is integral to production. On the other 
hand, the worker's wages represent a drain or reduction in profit. The 
crucial contradiction lies in the wellbeing of the worker. While being 
contrary to the wants of the employer, the worker must be able to live and 
support a family to continue able production for his employer. Adam Smith 
writes:

    A man must always live by his work, and his wages must
    at least be sufficient to maintain him. They must even
    upon occasions be somewhat more; otherwise it would be
    impossible for him to bring up a family, and the race
    of such workmen could not last beyond the first genera-
    tion. (67)

It is thus in the best interest of the employer to keep their workers well 
paid in order to keep production high. Smith goes on to write:

    The liberal reward of labour, as it encourages the
    propagation so it increases the industry of the common
    people. The wages of labour are the encouragement of
    industry, which, like every other human quality, im-
    proves in proportion to the encouragement it receives.
    (81)

In this case high wages keep productivity which leads to higher profits 
for companies:

    A plentiful subsistence increases the bodily strength
    of the labourer, and the comfortable hope of bettering
    his condition, and of ending his days perhaps in ease
    and plenty, animates him to exert that strength to the
    utmost. (81) 

Smith explains that high wages are a common interest of both workers and 
manufacturers in that productivity is direct affected by the wage rate:

    Where wages are high, accordingly, we shall always find
    the workmen more active, diligent, and expeditious,
    than where they are low; (81)

Often the manufacturer's reliance on the workers restrains some otherwise 
tempting activity. He writes:

    The pretence that corporations are necessary for the
    better government of the trade, is without any founda-
    tion. . . . It is the fear of losing their [workmen]
    employment which restrains his frauds and corrects his
    negligence. (129)

    Adam Smith talks about the use of laws and regulations. While the 
common belief is that Adam Smith is against such measures he comes out in 
favor of laws in favor of workers. He writes:

    Whenever the legislative attempts to regulate the
    differences between masters and their workmen, its
    counsellors are always the masters. When the regula-
    tion, therefore, is in the favor of the workmen, it is
    always just and equitable; but it sometime is otherwise
    when in favor of the masters. (142)

    Much is made of the "father of deregulation." Adam Smith has been 
designated such by many in the field of economics. His connection takes on 
a mythical role. These connections are taken for granted, and perhaps, 
like mythical legends are not always true. Adam Smith's beliefs have been 
stereotyped so when someone says "individuality" or "deregulation", we are 
supposed to think "Adam Smith." The actual reading of Smith's books must 
be a curiosity because he constantly winds up supporting the rights of 
workers and seeking a fair relationship between employers and workers. 
While Smith is connected to "laissez faire" economics, throughout The 
Wealth of Nations, there is a strong sentiment that society is better off 
when the common worker is treated good.
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