Adam Smith

Question 1

What is Adam Smith’s lifespan?

Answer 1

1723-1790

Question 2

What is Adam Smith’s nationality?

Answer 2

British/Scottish

Question 3

What book did he write, and when?

Answer 3

An Inquiry into the Nature and Causes of the Wealth of Nations (1776)

Question 4

What is the Legacy of Adam Smith’s work?

Answer 4

Smith has a large effect on classical liberalism, and economists such as Hayek.

He was a pioneer of political economy, and a key figure during the Scottish Enlightenment.

He is also known as ‘‘The Father of Economics’’ or ‘‘The Father of Capitalism’’.

Adam Smith is seen as the first serious thinker of liberal politics, which downplays the state in favour of marketing

He is the founding father of economic individualism

Question 5

What is the Relevancy of Smith’s work (and classical economists in general)?

Answer 5

Smith’s studies helped promote domestic trade and led to more efficient and rational pricing in the product markets based on supply and demand.

Classical economic theory helped countries to migrate from monarch rule to capitalistic democracies with self-regulation.

Question 6

How does Smith view wealth?

Answer 6

He believes wealth is produced. It is a function of labour productivity

Question 7

How does Robbery affect Wealth (according to Smith)?

Answer 7

Robbery doesn’t take away wealth, it moves from one person to the other

Question 8

What is the Source of wealth (according to Smith)?

Answer 8

Labour is the source of wealth

Question 9

What is meant by Division of LAbour?

Answer 9

The division of labour is the separation of tasks in any system so that participants may specialise.

Question 10

What is technical division of labour?

Answer 10

This means division of labour within a particular enterprise

Question 11

What is meant by social division of labour?

Answer 11

This means division into occupations.

Question 12

How can humanity be divided?

Answer 12

Into 3 component classes:

1. Master class – own the means of production
   They have certain revenue reading to profit
2. Landlords- own the land
   (the soil on which the factory is built)
   Their revenue is rent
3. Working class- give their labour to the production process
   Their revenue is wage

Question 13

What is political economy in terms of Smith?

Answer 13

• Political economy is the sign of state and legislation
• Science of law making, government, statesmanship
• Political economy in terms of Smith is political science .

Question 14

How does Smith view violence/political force?

Answer 14

Two subjects are not the same, but they are. equal. So who sets the rule of engagement? The strongest? The fittest?
Who makes the law? Who punished the wrongdoer? Who sets the game?

• Political violence should be absent from the exchange so there’s no political coercion
• Things should be in self interest, not because they’re forced to make that decision

Question 15

How does Smith view Public Policy?

Answer 15

Every issue regarding the manufacture is a meta for public policy
Those who can monopolise, or organise the market using cartels. Putting in forms of protectionism. It protects their own interests but hinders commerce society

There needs to be order/law/facilitation/punishment, to give Order and prevent trouble

Question 16

How does Smith view Class Struggle?

Answer 16

According to Smith, it shows class dilemma

The master wants to give as little as possible, and the workers want to get as much as possible

The conditions of labour are desperate. They’re hurting themselves, they’re short sighted

The masters are far and few in numbers. In consequence they can work together easily. The worker is starved until he’d forced to work again.

The workers need to understand they are their own affluence/worth
The greater the demand, the higher the price.

Question 17

What is Book 1 of The Wealth of Nations about?

Answer 17

The Causes of Improvement in the productive Powers of Labour

The Order according to which its Produce is naturally distributed among the different Ranks of the People

Question 18

How many Books are in The Wealth of Nations?

Answer 18

Five.

Question 19

What does Chapter One of The Wealth of Nations look at?

Answer 19

How economies benefit from something called ‘division of labour’

Question 20

What is Division of Labour?

Answer 20

When you divide the process of production into smaller parts, where workers take up each part.

Therefore multiple workers are involved in the process of production.

Question 21

What are the Strengths of the Division of Labour?

Answer 21

What has become specialised, and work more efficiently + quickly

More choice for what you can work in

Work is evenly distributed, so everyone works the same amount

Question 22

What are the Weaknesses of Division of Labour?

Answer 22

Work becomes boring and monotonous

Cost money to train workers

Interdependence: Workers depend on others for the whole production process to work

If someone is ill and doesn’t go to work, production becomes difficult

If someone becomes bored/tired and stops working to as high of a standard, production becomes less efficient/becomes a lower standard

Question 23

What is Technical Division of Labour?

Answer 23

This means division of labour within a particular enterprise

Question 24

What is Social Division of Labour?

Answer 24

This means division into occupations.

Question 25

Why is Division of Labour carried out in less important production processes?

Answer 25

DoL is supposed to be carried furthest in very trivial production processes, as opposed to it being carried further in processes of higher importance.

This is because the unimportant ones cater for fewer people. They are “destined to supply the small wants of but a small number of people”.

Therefore those employed in the different branches of the production process can often be collected into the same workhouse, and thus placed under one view of the spectator.

Question 26

What exemplar industry does Smith apply Technical Division of Labour to?

Answer 26

The pin-making industry, which can be divided into 18 different operations

Question 27

What changes occurred in the pin-making industry?

Answer 27

A workman is not educated to this business, nor acquainted with the use of machinery employed in it. He could barely, perhaps, make 1 pin in a day, but certainly not 20.

The way in which the business is now carried on is by being divided into a number of branches, of which most are likewise peculiar trades (the way its divided is rather peculiar).

Making a pin comes to a division of about 18 distinct operations. In some manufactories all are performed by different hands, though in others the same man will sometimes perform 2 or 3 of them.

Question 28

What did Smith observe in the pin-making industry when division of labour was applied to it?

Answer 28

A small manufactory of this kind where ten men were employed. Some of them consequently performed 2 or 3 different operations.

Though they were very poor and used machinery with a lack of interest; when they exerted themselves they could make around 12lbs of pins in a day.

There were around 4000 pins in a lb; and therefore they were making upwards of 48,000 pins in a day.

As there were 10 people it could be said that they could make 4800 pins daily. However if they all did it separately and independently Smith thinks “they certainly could not each of them have made twenty, perhaps not one pin in a day”. This is because they had not been educated in this peculiar business.

Therefore, they are only “at present capable of performing, in consequence of a proper division and combination of their different operations.”

Question 29

Although division of labour gives similar effects, what was division of labour’s limits in other industries?

Answer 29

In every other art and manufacture, the effects of DoL is similar to the pin-making industry. However, in many of them, labour cannot be so much divided or reduced to such simple operations.

Question 30

What happens with Farmers and Manufacturers?

Answer 30

In every improved society the farmer is nothing but a farmer, and the manufacturer nothing but a manufacturer. But the labour needed for one complete manufacture is always divided among a great number of hands

Question 31

What is Division of Labour like in the agriculture sector?

Answer 31

The nature of agriculture doesn’t submit so many divisions of labour, nor do they complete a separation of one business to another.

It is impossible to separate so entirely, the business of the grazier from that of the corn-farmer, as the trade of the carpenter is commonly separated from that of the smith.
o The spinner is almost always a distinct person from the weaver; but the ploughman, the harrower, the sower of the seed, and the reaper of the corn, are often the same.

The impossibility of making complete and entire separations is probably why the improvement of the productive powers of labour in agriculture do not always keep pace with their improvement in manufactures.

Question 32

What countries carry Division of Labour the furthest?

Answer 32

• This separation too is generally carried furthest in countries enjoying the highest degree of industry and improvement. The work of one man in an undeveloped country is equivalent to several in an improved one.