Smith's Singular Views on the Division of Labour

Chris Dillow of Stumbling and Mumbling, a lively economics blog, reports on the new Bank of England £20 note to be issued soon and asks: ‘Should the Bank really be celebrating Smith's view of the division of labour?’. His argument is summarized thus:

‘What puzzles me here is the note's celebration of the division of labour.
Smith, of course, had mixed feelings about this. Yes, it increases output. But it also dehumanizes and stupefies us.’ He quotes from Wealth of Nations (WN V.i.f.50: pages 781-2).

Read the piece at:

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2006/10/
the_bank_celebr.html#comments

Comment
I posted a reply on Stumbling and Mumbling as follows:

Smith on the division of labour, as on many other subjects, presents a more nuanced view of the subject than the simple pin factory and what Chris Dillow describes as ‘stupidity’.

First, the pin factory (WN I.i.3: pages 14-15) he quoted and the other one he visited were an example of one aspect of the division of labour; the other example was much richer in content and its implications as an example of the inter-sectoral division of labour, which he illustrated with the many contributors to the production of a ‘day labourer’s woollen coat’ (WN I.i.11 ; pages 22-23 ). This brought scores of people into contact through many transactions across the country and the world.

Second, Chris Dillow's references to the ‘stupidity’ problem may be missing the context in which he wrote the quotation (WN V.i.f.50: pages 781-2), namely ‘Of the Expense of the Institutions for the Education of Youth’ pages 758-81). In these pages he advocates a substantial expansion of education provision beyond the levels and extent provided for in England (and to some extent in practice in Scotland) and is marshalling all the arguments he can from the history of Classical Greece and Rome to convince his readers that ‘public expense’ in educating children of the poor is worth the money.

As many of the uneducated poor went to work around 6+ and not to school as things stood in the mid-18th century (and ever thus before then) his case (in the tradition of classical rhetoric) is focused on the strategic consequences for national stability if attention is not paid to the problem of a nation in which the bulk of its citizens were: ‘incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life’, to which he adds further in the paragraph (not quoted) that it ‘renders’ him incapable of ‘the life of a soldier’ and ‘defending his country’. A view clearly aimed at loosening the purse strings for education investment among the upper ranks of society, not by the effects on the minds of labouring people involved, but in fear of the consequences of ignorance if nothing was done to deal with it.

In short, it was a colourful case he presented for education using the division of labour at the micro-level as the rhetorical lever. He did not call for an end to the division of labour, because that would reduce Britain to the living standards of before the Roman legions, or even to the savage lives led by the ‘Indian’ inhabitants of North America.

Also, he was well aware of the pre-commerce age and its own horrors in short-life spans and stunted minds of slaves and tenant farmers and labourers, being connected through his mother’s family with many farmers and their labourers, the latter not being, what you might say, highly educated, with sharp minds and adventuresome from their labours in the fields. It was through the 'propensity to truck, barter and exchange' and the consequent division of labour, that human societies broke out of savagery.

I think it wholly appropriate that Smith’s contribution of the division of labour as central to his report on what made some nations richer than others, in terms of the annual production of wealth, i.e., the ‘necessaries and conveniences of life’.

He was by no means the first or only philosopher to identify the role of the division of labour (Plato, Petty, and so on), but he made it a major part of his analysis of the nature and causes of wealth.

It has been questioned by modern economists whether Smith should have centred on the division of labour (Heilbroner, Rothbard, for example). This is mainly because they took the division of labour for granted and did not appreciate Smith’s social evolutionary model of economic change from ‘savagery’ to ‘commerce’.