Category: Adam Smith

Ethics are fundamental rule, principal and moral value to judge what is right or wrong and good or bad. It is social accepted behaviour pattern to make a rational judgement based on basic framework. To gain social protection, ethical voluntary code of conduct is applied. Ethics are generated in situation where proper coordination between action in different circumstances and emotions is necessary. This essay will elucidate about the viewpoints of Adam smith, who is father of modern economy. Adam smith was an ethical business person who utilised his rational and logical thinking to pursue the opportunity and tackle threats and challenges in business sector. The three section of relation between moral and self interest of Smith’ life will be discussed precisely in upcoming paragraph.

In privatisation era, Adam Smith is most recognizable financial analyst, and protector of the free-showcase economy because every individual tries to accomplish self interest in free market economy. In maiden part, Smith emphasised on bogus partition between self interest and morality because he proved that with the assist of self interest, considering and doing about the welfare of social and nation is conducive. He believed that society plays crucial role to run any business. Business should be conduct by incorporating mutual avail of community and individual interest. Nowadays most companies involve in cooperate social responsibility in which they try to fulfill obligation towards their society in which business operates, it is part of Adam smith philosophy. He argued that public benefits are relied on private owners but ethical implication in commercial sector is hard to continue. WN and TNS were two books of Smith, first focused on self centred approach and second one was influenced by moral values. in both books, the first problem was about the thesis and second problem about the concept was not opposing because it was looking the same of both books. Idea of self interest was explained in both books in positive manner, but it was always analysed by other authors in negative manners as a vice, so it was contradicting. In TNS book, he used moral psychological technique of sympathy to elaborate self interest which leads to ethical decision making, herby it was seeming a fake relation. It was a complicated relation between sympathy and self interest, so it was not worthwhile business ethics and looking artificial approach.

Second part is that Smith’s moral way to deal with financial matters seems to be fit but qualified resistance of business society for its commitments to success, equity, and opportunity. Smith prioritised achievement and opportunity-oriented approach to succeed the business before their autonomy and prosperity but he was aware about ethical challenges accurately. According to Smith, appropriate social contract is sympathy for gaining morality but for commercial sector, exchanging is ethical platform. He tried to improve commercial society, for this, he made labour groups, property laws and reliance on new stakeholder to make strong business bond. He found that market influence, technical innovations and labour union organisations enhance the productivity and wealth of economy such as in ancient time, price of commodities decreased low than cost of production but with the injection of high labour cost it proved beneficial. There was an ethic behind the producer profit in this idea of Smith. Subsidies, direct taxation and completion controlling policies can provide more advantage to produces but it may be unfair with other sector professionals, so equal treatment is valid in all cases. The main emphasis of Smith terminology was on justice. Political system should regulate the economic system morally without partiality behaviour and envy with any merchants and manufacturers. At same time, reasonable price of goods and appropriate wage rate for workers should be set by the manufacturers. He prioritised the natural system of autonomy which is called lassie faire economy in which every person considers about self interest and it is free from government involvement also. The tremendous freedom should be allowed to merchant to increase competition and decrease involvement of government, it will be contributed to the wealth of nation by improving international relations. He described that commercial society works for their own interest and use their power for exploiting society which relies on business sector such as landowner uses power over tenant, then it emerges a bad evil. In modern time, there is interdependence relation between business sector and subordinates and labour has liberty to work anywhere else according to good working conditions, so it is persuasive approach to fulfill self interest. According to smith, there should be contribution of moral values like satisfaction, equality and independence of its workers and stakeholders by business society, thus concept of self interest and ethical values would be achieved to lead towards the economic and individual success.

The final part of smith moral philosophy concentrates on integrating ethical behaviour within business culture. He studied emotional content to grasp sympathetic concept about how people live satisfied in an organisation. For understanding emotions, firstly, he judged the verbal and non verbal language and effort of people and then he tried to know how spectator feels and reacts on actor expression and finally he analysed the effectiveness of actor’s action is productive or not to understand the situation. Sympathy is called natural human capacity because it is how to perceive, represent and react to critical situation and expectation of another to develop harmonious relationships. Both actor and spectator can understand their roles by replacing them on correspondence situation as people learn in childhood about how other imagine about themselves. It will assist to resolve conflicts in organisation by mutual understanding. Prudence is motivated communication to gain the respect of other. For example, at the time of selecting friends, personality traits, happiness, reputation and health are considered cautiously. Smith considered that how people should take care the other at the time of attending them is called benevolence, it important to show respect and values towards other to feel comfortable in organisation. In understanding, firstly, connections are generated with other to live closely and then mutual understanding are emerged to recognise situational circumstances and mutual traits. To reside comfortably in an organisation, smith thought rationally the deepest aspects of morality and mutual understanding.

In conclusion, perfect combination of morality and self interest is not difficult to accomplish but it is merely concept of ethical behavior applies to treat every stakeholder equally participate in accomplishing own as well as enterprise goal. Smith philosophy developed a new discipline to develop understanding of commercial sector with the injection morality concept. It will be profitable as well as ethical approach for both stakeholders and cooperation because integration of self interest and morality focus on profit maximisation and society welfare and stakeholder satisfaction also.

Imperative rule, basic and ethical values that are conducive to grasp what is right or wrong and good or bad is called morality. It is generally adopted behaviour to develop a critical and rational judgement and assist in achieving socially strong bonds. The situation in which ideal coordination between action and emotions in different situation is maintained to generate the ethical values. Adam Smith’s opinions about morality and self interest will be discussed in this essay. Adam Smith was renowned as father of contemporary economy who utilised his critical thinking to take avail of the chances and overcome obstacles in business field.

In modernised era, Adam Smith is recognised as a famous monetary analyst because he tried to gain self interest with the concept of moral values. Smith focused on an incorrect comparison between self interest and morality in initial part because he reckoned that considering about the wellbeing of society is helpful with self interest concept, but he did not observe. According to his philosophy, business and society are mutually interrelated, that’s by companies must perform them cooperate social responsibilities because public interests is relied on private owners also. He wrote two books WN and TNS, first emphasised on profitable approach and another one focused on ethics. He explained self centered approach in both books, in second books, TNS, he discussed sympathy with factor of self interest to make rational decision, but it was looking artificial approach.

In next phase, ethical approach of Smith was appearing suited with financial matters, but it resisted the business commitments towards success and equality. He prioritised achievement and opportunity-oriented strategy to be triumphant in commercial sector earlier than their autonomy and prosperity however he was once conscious about moral problems precisely. He enhanced commercial society culture by creating labour groups, property legal guidelines and reliance on new stakeholder to make robust commercial enterprise bond. He discovered that market, technical innovations and labour union enterprises stimulate the productivity and wealth of economic system such as during ancient time, price of products diminished lower than cost of manufacturing however with the injection of high labour fee it was worthwhile. Smith was considering about the produce profit by gaining advantage of grants and tax rebates, but it opposed to other professional interest. To develop justice and equality, lassie faire economy should be adopted, and price of goods must be economical and appropriate pay rate should be set. Hereby, market competition as well as growth of nation could be influenced positively. Today, business and society have interdependence relation because both dependent on each other such as businesses run for fulfilling their self-interest and provide health working conditions to their members. These practices develop

Feeling of equality and justice, which is helpful for economy and individual success. The last part of smith theory emphasised on emotion aspect to fulfill needs of people in an association. To grasp emotions, firstly, he focused on verbal, non-verbal and body language of people and then spectator tried to react on these expressions and interpreted it to judge it effectiveness. Sympathy is human naturally gained skill to response in any logical circumstances. For example, reactor and actor can replace each other to understand their emotions thus conflict can be resolved, and strong relations can be developed. He elucidated that people must show respect and careful attitude to develop better mutual understanding and harmonious relations in organisation through their moral values.

To conclude, appropriate coordination between self interest and morality is possible to achieve by behaving every stakeholder equally in organisation thus individual as well as enterprise goals can be satisfied easily. Smith emphasised that if morality is applied to business sector, it will emerge as profitable approach for commercial sector as well as for beneficial for social and stakeholder’s development.

Philosophers from different parts of history are still studied today all over the world. The works of people like Socrates and Ibn Sina, which were written thousands of years ago, are still continuing to be discussed by intellectuals. So why is philosophy so important? Why must we continue to discuss the works of people who lived in ancient times? Well interestingly enough, the works of these philosophers are still relevant today. We can look at contemporary issues today, and compare how philosophers back then viewed them. Have views changed? Have they stayed the same? One philosopher in particular whose work still resonates and relates to current issues in our world today is Adam Smith, most notable his philosophy written in ​’The Wealth of Nations’​. We can compare Smith’s work to the garment industry crisis we see today in our society. Smith discusses how he feels about mercantilism and how laborers are treated during his time; which we can compare to how workers in Bangladesh are being treated today.

To understand the elements of Smith’s work, we must first look into who Adam Smith was and what issues were going on during his time which motivated him to write ​’The Wealth of Nations​’. Smith wrote ‘​The Wealth of Nations’ ​during the same time period that the United States was ending its revolution with Great Britain and becoming its own independent nation. This meant that Great Britain was losing one of its colonies which Smith saw as a good thing. He believed that it was better to have independent nations because Great Britain was spending morem on the countries they had as colonies than they were really worth and he was interested in the idea of free trade between nations. Smith then goes on to discuss his writings on an array of topics; all centered around the economics of his time period. He discusses the division of labor, market price vs natural price, supply and demand, and how capitalism affects the working class.

‘The ​Wealth of Nations’ ​in a broad sense, is a discussion about the economy, capitalism, and mercantilism. In Chapter 1 of Book 1, Smith goes into detail about what the division of labor is. Division of labor is when different people in a factory do their own individual tasks, so that production increases. For instance, if a production line was making a table, one person would make one leg, one would make the top of the table, another makes the other leg, and so on. Each person would be assigned to their own specific job that they felt best showed off their strengths. In Bangladesh, the workers work on a production line. Sewing specific parts of shirts each day, much like the type of work Smith is talking about.

Smith’s discussion of the division of labor and the value of money relates to the crisis in our global garment industry today. Major companies in the United States such as Walmart and Gap have factories located in Bangladesh where workers manufacture all of their clothing. Companies like Gap and Walmart have their work done overseas because it costs a lot less to pay for their employers and supplies. This however has made way for many ethical problems. As of 2013, laborers in Bangladesh were getting paid as little as $68 a month for their work in the factories. The pay they were recieving contrasts with Smith’s view on wages. In Book 1, Chapter 8 of ​’The Wealth of Nations’​, Smith discussed his views on how much wage laborers should get paid. Smith explains that laborers should be paid enough to survive because they need to keep themselves alive or else they will see no point in going to work. He then goes on to explain that the minimum wage might in fact need to be higher than that because the working class needs to make enough money to keep their children alive and therefore keep the working class alive as a whole, so there can be another generation of working class civilians. As we can see in Bangladesh, this is not the case.

Smith argues that when a society is ‘pure of liberty’ then capitalism in fact can be moral. Workers in Bangladesh, nonetheless, do not necessarily have the liberty to stop working. In addition to being paid almost nothing, many of the workers in Bangladesh do not get any recognition for their hard work. For example, the companies we discussed before do not exactly show off to their consumers how their products are really made. This is because, these workers face horrible conditions and don’t get any compensation from these multi-million dollar companies when they face hardship. In 2013, a garment factory building, the Rana Plaza, located in Savar Upazila, Bangladesh collapsed. This collapse killed more than 1,135 workers and injured around 2,500. The worst part, this could have been prevented. The workers who were working at the Rana Plaza had felt unsafe going into work and told their managers how they felt. However, when brought to their attention, the managers threatened to withhold the workers pay if they did not go to work. The workers hardly make a wage they can live on, so they took the risk. These workers do not have the liberty to not go to work if they want to make enough money to survive.

The way that the companies who were responsible for these workers went about responding to this tragedy was just as terrible. The families of the workers who died in the factory collapse did not receive any compensation. Many of these workers were providing for their families and now they are left with nothing. These workers are treated with the same amount of disrespect as slaves. These large companies do not seem to care about the worker’s well-being, but just about what they can do to help their companies progress in the cheapest possible way. This relates to Smith’s argument on the relationship between waged workers and slaves. Smith believes that wage laborers are actually cheaper than owning slaves. He thinks this because of how the systems are set up. Firstly, slaves are set up to have no reason to want to do work because they are not getting paid and they do not respect the people they are working for. Wage laborers however, have the incentive of getting paid and the slight change they can get promoted for working harder, so wage laborers, Smith believes, work harder than slaves.

Another reason Smith feels as though wage laborers are cheaper to maintain is because they spend their own money on feeding themselves or spending on resources they need when they are sick. When someone owns a slave, they have to pay themselves to feed them and buy them necessities they need to survive. Although this mindset is dark, it does not seem so far off from the beliefs of the corporate leaders who exploit their workers in foreign countries every single day as a way to create cheap clothes.

Although some of Smith’s arguments give the idea that he is against capitalism, he actually believes capitalism is productive and moral when the society is well governed. However, the crisis in Bangladesh does not fall under the idea of a ‘well-governed society’. When innocent civilians are being exploited for their work, not getting paid what they deserve and have to deal with terrible work conditions, it does not look like Smith’s idea of a moral capitalistic society. Issues like these have been swept under the rug for so long that most consumers do not even know the backstory of their clothing. Capitalism should not go as far as to put the lives of innocent civilians in danger when all they want is to make a living. Clothing is a basic necessity for human beings, but at what cost.

About the author Smith was born in Kirkcaldy, Scotland, in 1723. At 15, Smith visited the Uni of Glasgow to review philosophy, and the like at Oxford University. He began giving public lectures in Edinburgh in 1748 and was appointed chair of logic at Glasgow University in 1751. In 1763 he resigned his post to become the non-public tutor to the Duke of Buccleuch, a young Scottish Lord. The combine cosmopolitan across Europe and worked with academics as well as business experts, Helvetius, and Quesnay. Smith spent most of the following decade writing ‘The Wealth of Nations’ on his return to the European country. He was appointed commissioner of customs in Edinburgh in 1778, following in the footsteps of his father. He died in 1790, and was engaged to ne’er.

With one moment, Smith illuminated the mystery of political economy: “Consumption is the sole end and intent of all development”. Smith separated the meta from physics. Political economy is and is clearly our assistance.

States’ wealth argues three basic principles and proves them by plain thinking and abundant examples. And philosophers should have no trouble understanding the theories of Smith, “Economic progress depends on a trinity of human prerogatives: promotion of self-interest, division of labor, and freedom of commerce” (Rourke).

The pursuit of self-interest is nothing inherently wrong. That was the best insight for Smith. This hardly appears as news to a reader of the twenty-first century. Or, rather, it seems like all that’s in the media. Selflessness is declared at the highest of the lungs of the altruist these days. Being a star is definitely of interest to the self. Bob Geldof’s found one way to stay. With the exception of most of history, wisdom, beliefs, and morals demanded subjugation of ego, bridling of aspiration, and self-sacrifice (and, by patriarch to patriarch, relationships, if you will catch them).

This meekness, like the production of Adam Smith, had finish and purpose associated with it. Most people had no control over their material circumstances, or even if they were slaves or servants, their material persons. North American nation created asceticism within the doghouse of ancient and medieval existence feels less like dogs.

Yet economists lived in an extraordinary place and time when ordinary people got down to having the control to follow their self-interest. Within the section ‘Of the Labor Wages’, in the book one of ‘The Wealth of Nations’, Smith commented in an unnecessarily voice which approached trendy irony, “Is this development, in the circumstances of the lower ranks of the nation, to be deemed a benefit or a related annoyance to society?”. If within the eighteenth century, wealth was not, indeed, considered a self-evidently smart one. But no one has daunted to raise them in several places. Nevertheless, raising our circumstances is a matter of stupidity, sacrilege, or grossness. The problem is how to get to know it.

The solution is labor division. It was simply a simple answer — except for most of the students theorized by the World Health Organization before the economist about the political economy. Because human beings, there has been a division of labor. The division of labor could also be said to have been painfully evident once the initial Adam delved and spanned his Eve. Girls suffered childbearing agonies, while men fiddled in the garden.

The below gift thought of Adam was not the primary thinker to notice specialization or to visualize the area unit divisions as innate as laboratories. Nevertheless, Smith was arguably the first to grasp the many implications of the division of labor. In reality, the term seems to have been unreal.

From the alternative writings of Adam Smith, it is clear that he was an ethical advocate of freedom. However, there are almost uncomfortably pragmatic arguments for freedom within ‘The Wealth of Nations’. Smith opposed most economic constraints: tariffs, bounties, quotas, value controls, wage-boosting united personnel, mend-paying employers, monopolies, cartels, royal charters, guilds, apprenticeships, enterprises, and after all slavery. Smith also resisted licensing physicians, a mental basic system that required extra licenses to allow quacks beyond the marketplace. Yet Smith advocated a variety of constraints on people, lest brute force become the foundation of an unlawful society.

In words additional unhappy associate degree honest than we’re used to hear from an economic expert, Smith declared, “The peace and order of society is more necessary than even the relief of the miserable”, while economic freedom will increase the quantity of the miserable, requiring more constraints to maintain peace among them, resulting in greater loss of liberty.

Smith was also aware of the disappointment of economic freedom. He was greatly worried about the effects of exploitation within the division of labor: “The man whose entire life is spent in many straightforward operations…typically becomes as stupid and ignorant as it is possible for the creature of a person to become”. We saw this in uncounted politicians as they shake and turn their way through campaigns. But it’s worth it. Every type of productivity can be doubled by specialization. Yet politics specialization at least stops politicians from running businesses whereby their incompetence yet mental object will damage the economic system even more.

By demonstrating that there was no mounted amount of wealth during a country, Smith additionally checked that the existence of a definite horde of riches could not be stated above. Wealth should be determined by the degree of trade in goods and services-what is going on inside the kitchens and stables of the castle, not what is fastened inside the tower of the castle in strong boxes. In the first sentence of his introduction to ‘The Wealth of Nations’, Smith states this measure: “The annual labor of each nation is that the fund that originally supplies it with all the necessities and conveniences of life it consumes annually”. Smith thus created the idea of gross domestic product during a stroke. Though trendy economists would not have left anything to say, standing around silent in hideous neckties, expecting MSNBC raising them to silence in the sky.

Therefore, if wealth is all ebb and flow, it is its live, income. Cash does not have any intrinsic value. Therefore, any baby that has devored a nickel can tell you. And the data do not seem to displease people who are sufficiently old to have been detected about the commonwealth and to have lived through the executive. Nevertheless, money was still largely made from precious metals in the eighteenth century. Smith’s cash remarks should be slightly discouraging to his readers, even though they would be the instance of bling-deluged but impoverished European nation to verify what he said earlier. Gold is, well, the price of its weight in gold, but certainly not the price of the rest. It was almost like Smith, checking that we’re all going to get more cash, then verifying that money isn’t getting happy. And that’s not it. It’s leasing it.

Principal effects within the terrible year that the greatest capitalist nation of history declared its independence, the wealth of countries was printed, with neat coincidence. And the notion of u to the educated folks of the beautiful UK of Great Britain and Northern Ireland. Moreover, America was unreasonable, unreasonable, and bizarre, as it were than any of the concepts of Adam Smith. Wealth was not lightweight reading, even by eighteenth-century readers’ weightier standards. Nevertheless, one thing of real success has been a success d’estime partner. In six months, the primary edition sold comes, amazing its publisher. Besides this, there is no evidence that Smith’s work amazes his contemporaries.

For example, nobody was shocked by Smith’s assertion of the economic importance of self-interest. That self-interest makes the globe go spherical has been acknowledged tacitly since the globe began to go round— a very little secret that everyone knows. Smith’s smart friend thinker 1/4 of a century earlier disquieted the troubling idea that money was impossible. So, since classical times, the fictional quality of cash had been well understood. Imperial fictions lowered the silver content of the Roman coinage from one hundred percent to none in the 200 years between the reigns of the emperors Nero and Gallienus.

Rulers no doubt thought at first glance that the title of the book referred to the wealth of states, when Smith in fact used the term ‘nation’ to mean the people of those countries. He claimed that the smartest governments did not put their trust in themselves to create wealth, but in their citizens’ creativity.

The time test has generally stood the consistency and common sense of Smith’s delineation of the role of government. Governments can grow big and bloated today, moving into areas that are not really their business, but in time this inevitably makes the general public poorer. Smith argues that investment in this way threatens to weaken a society’s natural tendency to better allocate capital.

In the first three chapters of the book, ‘The Wealth of Nations’, by Adam Smith, the central question addressed is how division of labor resulted in man’s newfound capability to produce in quantities previously unattainable. Division of labor has resulted in an identical amount of work producing significantly more. This improvement is credited with the increased specialization of laborers, time saved from absence of the need to switch tasks, and increased technology. How division of labor came about is explained through human nature and market realities. Smith contends that human nature is to barter and to pursue making one’s surroundings more efficient. The practical realities are access to water-transport and the existence of bigger markets. In sum, the increase in production can be attributed to two traits of human nature and to two tangible realities.

One of the sources of the vast increase in the output of the individual laborer is human nature, which constantly strives to make its surroundings more efficient. This attribute is assumed by Smith and is elaborated upon in numerous examples. In an industrial environment benefitting from division of labor, each worker has a narrow lens through which he sees the world, forcing all his concentration onto the task at hand. The laborer has undergone extreme specialization and mastered a task which is one of a series of processes needed to manufacture, for example, a nail. This ecosystem coupled with the aforementioned attribute of human nature naturally results in the worker devising methods to do his task in a more efficient manner. Smith credits not only the great thinkers and philosophers for the various inventions which increased industrial efficiency, but also the simple worker for precisely this reason. To emphasize the intuitiveness of this pursuit, Smith describes a boy, responsible for the opening and closing of an essential valve on a fire-engine, who manages to automate his task by tying a string to the various elements of the valve. The latter made his life easier and allowed him time to play with his friends. This example, while seemingly trivial, emphasizes the outlook endowed upon those whose work is extremely specialized. In sum, the human urge to streamline has naturally led to the division of labor.

Continuing his thought of the influences of human nature on the division of labor, Smith elaborates on the significance of the instinct to barter. Multiple ideas are raised as to what is the reason for such an attribute and why it is unique to man. An explicit acknowledgement of human uniqueness in speech and ability to reason is used as a possible explanation. In contrast, animals never barter and have never been observed partaking in any form of exchange. Additionally, a typical fully-grown animal does not rely on any other creature for his wellbeing, whereas humans in modern society are precisely the opposite. A human is constantly required to interact and rely on other people. Furthering the logical flow of these ideas, is the assumption that like animals, humans act purely in self-interest, and that this is the basis for mankind’s utilization of bartering. Through bartering man can obtain what he desires by convincing the other that it would behoove him to accept what is offered. This is proved by Smith through an extreme example of a beggar, wholly reliant on others’ compassion, who too barters, when exchanging that which he has received for other goods which he requires. The latter disposition is the root of the creation of division of labor. To emphasize the instinctiveness of the matter, Smith uses another example to prove the solidity of his claim. Even a tribe of huntsman partake in the division of labor. They barter their various skills to their fellow tribesmen whether it be in manufacture of weaponry, homes, or clothing. Through taking mankind back to its prehistoric roots, Smith effectively shows that human nature is the source of the need to barter and not any other external factor or influence. Through this simple yet effective method, one can easily trace human activity from its roots in a tribal economy, to the current, highly developed economy with endless opportunities to barter unique goods and skills.

Smith does not naively credit aspects of human nature as solely responsible for the development of the division of labor. The tangible realities of market size and natural factors, which surrounded humans in certain areas of the world, served as catalysts to the progress of this division. Smith puts it very plainly: specialization can only occur if there are enough people who can benefit from this individual’s sole toil. This is a very logical fact, yet he nonetheless elaborates thoroughly to prove it, using the Scottish Highlands as an example. In addition to demand and consumers in the vicinity of a specialized worker, transportation of goods also serves an essential role. Smith compares transport of goods over land to that of over water. Through detailing the expenses and inefficiencies of horse-drawn wagon transport to the efficiencies of water transport, in terms of speed, labor costs, depreciation of infrastructure, risk, and amounts of goods able to carried in either method, it is empirically proven that water transport is far superior to that of land transport. However, what are the results of this fact and how does it connect to the rest of the argument? In essence, water transport allows specialized workers to provide their goods to other markets in a way that land transport is incapable of doing. Smith concludes that areas of the world which first implemented division of labor were ones with easy access to ports and waterways, whether it be Egypt, India, China, Holland, or Greece. Therefore, the significance of market size and water transport are shown to be essential in the development of division of labor.

On one hand, Smith eloquently details the fruits of the division of labor and the material opulence it has brought to modern society, but fails to address the significance of individual rights. Furthermore, the claim that the opulence obtained through industrialization is ‘diffused’ in society is particularly unfounded. It may be true that in an industrialized society the working class will have more, in contrast to that of a purely agrarian society, but it does not mean that the wealth is distributed in a fair or just fashion. The United States’ Founding Fathers wrote of inalienable rights and the right to life, liberty and the pursuit of happiness. In my view, there are elements of life that bear more significance than owning more or living in more opulent conditions. Smith strictly addresses the utility of goods. The utility of meaning and self-worth are immeasurably greater than the utility of a fancier garment or other material objects. Smith assumed that a worker only desires good living conditions, proving so through stating his living conditions are better than an African king. This is too narrow an approach to the nature of mankind. The sole desire of man is not to satisfy an insatiable thirst to consume goods. Making a simple industrial or manufacturing operation the sole employment of a man’s life, as Smith states, is not a recipe for meaning. I cannot decisively refute any claim that capitalism is an overall force for good, but what is apparent is that additional aspects of human nature must be taken into account when discussing the utility of the division of labor.

In conclusion, Smith explains the history, source and byproducts of the division of labor. The many claims made are reinforced with detailed examples, evidence, and empirical observations. Some, assumptions which are made regarding human nature’s tendency to strive for efficiency, slothfulness in pre-division of labor, and the fact that humans only act in self-interest, are not effectively proven. For the most part, however, the claims made are systematically proven through a diverse set of observations and historical examples. Therefore, the question of how division of labor has resulted in the increase of production is addressed and sufficiently answered.

‘Economy’ is assumed to be a part of natural phenomenon, something that was given to human creatures completely predefined. This means that we do not classify the existence of economy as modern. However, it is essential to note that the word ‘economy’ itself came into being in the late 20th century when neo-liberalism started in the 1970’s. Economy is a modern concept, just like progress. It is ironical that we categorize economic development as ‘progress’ and countries or nations spend a lifetime thriving to achieve this progress through advancements in their economy.

It is reasonable to believe that exchange of goods and services has been a part of society since forever because one person can certainly not produce and consume every item. For this reason, the barter system came into being where people exchanged goods and services frequently. For instance, exchange of apples for bananas. This system was successful and widely used until the concept of money emerged. Money got more popularity because of its portability, value, and durability. Overtime, the barter system completely ended and power of money took over. This requested the beginning of market where producers and consumers can come together to sell/buy goods and services. Thus, it was in the 18th century when the consumer society emerged and people started to acknowledge the existence of ‘market’.

Idea of market, defined by various scholars, circulated worldwide. During this very period, Adam Smith expressed his ideas through a book named ‘Wealth of Nations’ published in 1776. This book brought a lot of popularity to Adam Smith who was also titled as the ‘Father of Economics’. Adam Smith introduced the components of free market, self-interest, and division of labor as the domain for economy. He also gave the theory of ‘invisible hand’, which formed an entire market structure. His ideas created a capitalist society later on, which is one of the most significant reasons as to why his importance has grown over time.

Adam Smith introduced the idea of free market for all the economies concerned. He suggested that a market should operate without any kind of government intervention. To be more precise, he wanted the government to understand that politics and economy have different implications and one should not intervene with the other. As per the theory of invisible hand, he suggested that the market forces readjust themselves to form equilibrium. Demand is the willingness and ability of consumers to pay for a certain good or service while supply is the willingness and ability of producers to produce a good or service at a specific amount. Demand has an inverse relationship with price, as when the price increases, demand falls. On the other hand, supply has a positive relationship with price where an increase in price will cause an increase in supply. The point where supply and demand meets is known as the equilibrium. Smith argued that these market forces are designed in a way that they can readjust themselves in case of any difference to reach a new equilibrium. He deemed state intervention as ‘unnecessary and inefficient’ (Brown, 1992).

The concept of self-interest is equally important as it recognizes the human cognition and molds the market accordingly. Adam Smith argued that people are rational human beings and they always act in favor of their self-interest, regardless of its effect on others. In Wealth of Nations, Adam Smith says, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest” (Smith, 1776). This means that Smith expected every consumer and producer to behave in accordance to their benefit rather than as a favor on others. For instance, consumer will only buy the product when its utility is greater than the price and a producer will only produce if there is some profit attached to the production. Moreover, due to a visible trend, it can be concluded that people want to have positional goods that will bring them some kind of status position or status in a society since many people will be unable to buy those goods. Smith links this to the moral philosophy and claims that people do not strive for position, or they do not spend a lot to get a sense of achievement, they want acceptance by the society and they only care about what people think of them. In ‘Theory of Moral Sentiments’, another book of Adam Smith published in 1759, argues, “To be observed, to be attended to, to be taken notice of with sympathy, complacency, and approbation, are all the advantages which we can propose to derive from it. It is the vanity, not the ease, or the pleasure that interests us” (Smith, 1759).

Lastly, Smith proposed the idea of division of labor and specialization. He claimed that in order to increase productivity, labors should specialize in what they are best at, and then repeat that task in order to do it perfectly and speedily. In his book, Smith has portrayed this with the example of production of a product as tiny as a pin. He broke down its manufacture in 18 different stages, which increased the production to forty-eight pins a day from twenty pins a day. Smith claims that division of labor has numerous benefits for the society. Firstly, it increases the output and efficiency of the workers. Secondly, due to the reduction in cost, a variety of goods and services become available for people to maximize their utility and choose accordingly. “A consequence of this worldwide division of labor is that even a common artificer or day-laborer in a civilized and thriving country has access to wide range of commodities that represent the labor inputs of many thousands of other workers” (Brown, 1992).

Although Smith introduced the components of free market, self-interest, and division of labor for an economy to function properly; these elements also faced criticism. The concept of free market was questioned based on the requirement of public goods. Government involvement becomes necessary in the case of provision of public and merit goods. For instance, market would prefer to sell cigarettes because of their profitable nature, but government puts a restriction on its excessive production because of the negative externality. The element of self-interest is questionable because of its selfish motive. Behaving in a certain rational way for economy might lead to distortion of an economy as a whole. This self-interest serves, as a justification for the parallel economy where people transact according to their benefit since all the care about is their self-interest. Lastly, the idea of division of labor was even criticized by Adam Smith himself. He critiqued that specializing might increase the output but the performance of monotonous task by workers lead to a decrease in motivation. Workers get tired of executing the repetitive job as they are expected to behave like a machine. Moreover, division of labor is dependent on the size of market and the scale of production. For instance, a factory worker might go through division of labor but a butcher, owning a small shop, might have to complete all the tasks himself.

To conclude, the model proposed by Smith is unrealistic for modern day world. The ideas given by Adam Smith are still used and evaluated in the economy. These concepts helped in shaping the market as a capitalist one where people only consume or produce to maximize their profit. Although the ideas presented by Smith were before the capitalist model came into existence but the notions of capitalist market stand by the influence of Adam Smith. This is why Porter refers to Adam Smith as ‘that high priest of capitalism’ (Porter, 1990). Similarly, an authority on Adam Smith writes, ”The Wealth of Nations’ was adopted as an ideology of early liberal capitalism and its popularity may have been due as much to the way in which it accorded with the economic and political prejudices of the emergent bourgeoisie as to its intrinsic merits as a scholarly works’ (Campbell, 1971).

References

1. Brown, V. (1992). The emergence of economy. In S. Hall, & B. Gieben (Eds.). Formations of Modernity (pp. 128-174). Oxford and Cambridge, Great Britain: Redwood Books.
2. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Cadell, T. & Strahan W.

Adam Smith believed that, “Government should limit its activities to administer justice, enforcing private property rights, and defending the nation against aggression” (Mark Skousen, 2016). Smith advocated for free markets and believed that government intervention was not necessary to control the economy as the forces of market competition would allow the economy to function in the most efficient way; this is the notion of the invisible hand. He agreed with ‘laissez-faire’ believing that a pursuit of self-interest would ultimately benefit all individuals if they were left alone, leading to allocative efficiency being achieved and more wealth being created. This being said he did not reject the state and gave them important roles in external protection, internal protection and building and maintaining certain institutions in order to provide an environment that would allow for policies that he believed would maximize the wealth of nations.

Smith gave the state such a limited role in the economy as he believed all systems of political preference cause scarce resources to be employed less economically than would have otherwise been the case (D. A. Reisman, 1998). In Smith’s eyes, in order to maximize productivity, the market must be controlled by market forces if nations want to be as successful as possible and become wealthier. Smith thought that the government would repress self-interested people, and self-interest motivates more powerfully and consistently than kindness, altruism or martyrdom (Todd Buchholz). So, the state shouldn’t intervene in order for everyone to be able to pursue their maximum self-interest resulting in the economy achieving the maximum productivity attainable. This being said, due to Smith’s focus being on achieving maximum productivity and wealth, it is often assumed that he would accept inequality as a trade-off for a more prosperous economy- this is not true. By virtue of the design of his policies inequality was impeded without sacrificing the wealth of nations; in fact, Smiths key policies work against the concentration of wealth (Deborah Boucoyannis, 2014).

Another reason Smith gave the state a minimal role in the economy is because inefficiencies would be created due to policy makers making decisions that would not benefit individual workers or businesses. Policy makers have missing information and are not as knowledgeable about individual circumstances as the people that are directly involved; this lack of information will restrict prosperity of individuals and businesses and there will be a deadweight welfare loss. Another flaw that Smith identified is that government workers always get rewarded regardless of their effort/success; he believes that policy makers will become negligent and this will augment the allocative inefficiency they already create. Furthermore, Smith believed the state would favor the rich. Public policies generate the most economic rent for those favored by the policies. Policy makers themselves are wealthy, so they are likely to create policies that favor the rich which are not in the best interest of the majority of the population. Rent-seeking behavior of policy makers would compromise the ability of the state to create an environment where all individuals could fully pursue their own self-interest; the state has an incentive to keep money for itself and become more powerful as then it will then have more influence and control over the citizens of the country and the functioning of the economy (Arthur A Goldsmith, 1995).

Smith gave the state a role in both internal and external protection. He wanted the state to provide a military to protect against foreign aggressions, and also police and law to protect against domestic aggressions. As the economy grows the importance of having a strong military increases due to the fact richer nations are more likely to be targeted by other nations. In ‘The Wealth of Nations’ Smith says individuals must be protected from ‘injustice and oppression’ (Wealth of Nations) within society; he believes the state must provide internal protection in the form of police/ law and order. He believed that the government must civilize society and sustains its civility (Werner Bonifield, 2013). Without a civil society Smith’s ideas are not possible – ‘the invisible hand’ would not prevail if there was social disorder. The importance of justice was emphasized by Smith and as a philosopher you could say Smith’s job was teaching governments to think of themselves as the custodians of the invisible hand (Nicholas Phillipson, 2011). This would promote an environment in which individuals can strive to maximize their wealth which will in turn maximize the size of the economy. The third role Smith gave the state was to erect and maintain certain public institutions that would be advantageous to society. He was specific about what should be classified as a public good; if private agents did not have an incentive to maintain the good then it should be upheld by the state. Some examples of goods Smith believed the state should provide are transport infrastructure and basic education. He believed basic education should be a right and could be used to help reduce inequality. Smith said there was very little difference in the intelligence of the rich and the poor, so access to education would mean everyone had the ability to prosper.

Another role for the state was to administer taxation. In ‘The Wealth of Nations’ Adam Smith argued that taxation should abide by four principles: fairness, certainty, convenience and efficiency. He gives the state the role of administering taxation but to him the employment of tax accountants leads to a deadweight loss to society, so taxes should not be complicated and there should not be a huge amount of people employed in administering them. Generally, he thinks taxation should be proportional to how much a person benefits from living in society (Paul Mueller, 2016). However, he believes some taxes should fall disproportionally on the rich, such as taxes on luxuries. Smith does not want taxation to depress the self-interest of motivated workers, as he believes that will restrict the growth of the economy, so he wanted taxes to be as low as possible in order to meet the public needs of the nation. However, this does not mean he wants the poor to suffer. In ‘The Wealth of Nations’ Smith says, “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable”. Despite his advocation for ‘laissez-faire’ capitalism he was not on the side of the rich- smith stated the way to measure a nation’s wealth is the ‘wages of the laboring poor’. According to Smith, the unconstrained operation of the system of perfect liberty improves the conditions of the poor as wealth for rich tends to trickle down to the lowest earners in society. The case of the turnpike tolls show that Smith was prepared not only to slate the rich but to slate their preferences as well. His attack on luxury, indolence and vanity implies a philosophical standard which identifies fairness with function and not with even-handedness (D. A. Reisman, 1998).

Smith did give the state an exceptionally limited role in the economy but he gave it one overarching goal: preventing social disorder by providing an environment where individuals could work to maximize their self-interest; without this the invisible hand would be undermined. Smith did not believe that the government would promote national prosperity if they played an active role in the operating of the market – he thought market forces should control supply and demand. Smith thought limiting state intervention would lead to economic growth which would benefit all of society, including the people on lower incomes as money should ‘trickle-down’ through the economy. Smith’s principle belief that people acted in their own self-interest, especially in economic terms, is the main reason why he gave the state such a limited role in the economy, as the intervention would simply reduce self-interest and the ‘invisible hand’ was enough to encourage individuals to act in ways that would mutually benefit the rest of society. Smith is not opposed to the government, he is simply opposed to certain activities of the government at the time, and the limited role he gave the state is the way he thinks the wealth of nationals can be maximized.

References

1. Mark Skousen. (2009). The Making of Modern Economics. Retrieved November 2020 from https://krembol.ga/book.php?id=6sisXMv_AecC
2. D. A. Reisman. (1998). Adam Smith on Market and State. Retrieved November 2020 from https://www.jstor.org/stable/40752070?refreqid=excelsior%3A6aa4460c24561bffee9dea632bdd2625&seq=1
3. Todd Buchholz. (2007). New Ideas from Dead Economists. Retrieved November 2020 from https://ebookcentral.proquest.com/lib/exeter/reader.action?docID=5337961
4. Deborah Boucoyannis. (2014). Contrary to Popular and Academic Belief, Adam Smith Did Not Accept Inequality as a Necessary Trade-Off for a More Prosperous Economy. Retrieved November 2020 from https://blogs.lse.ac.uk/politicsandpolicy/adam-smith-and-inequality/
5. Werner Bonifield. (2013). Adam Smith and Ordoliberalism: On the Political Form of Market Liberty. Retrieved November 2020 from http://eprints.whiterose.ac.uk/67376/1/Adam_Smith_and_OrdoliberalismFinal.pdf
6. Paul Mueller. (2016). Adam Smith on Public Policy: Four Maxims of Taxation. Retrieved November 2020 from https://www.libertarianism.org/columns/adam-smith-public-policy-four-maxims-taxation
7. Arthur A Goldsmith. (1995). The State, The Market and Economic Development: A Second Look at Adam Smith in Theory and Practice. Retrieved November 2020 from https://onlinelibrary.wiley.com/doi/epdf/10.1111/j.1467-7660.1995.tb00568.x?saml_referrer

Democracy is a highly contest term and is constantly redefined by modern contexts. However, the success of a democracy always relied on its ability to ensure political equality and liberty. Yet the struggles in modern democracies such as US and UK highlight the difficulties in achieving these goals. Ronald Reagan (1982) once proposed that to foster the infrastructure of a democracy, there must be a system of a free press, unions, political parties, universities, which allows a people to choose their own way to develop their own culture, to reconcile their own differences through peaceful means. To achieve this, modern democracies must cultivate a sentiment called sympathy which was proposed by Adam Smith in the ‘Theory of Moral Sentiments’ (TMS). Smith explains that sympathy is the ability for one to make moral judgement through the process of imagination, reasoning and feeling. By engaging in the emotions of the fellow people, individuals can then form understanding and establish commonality. However, sympathetic sentiments are not without its risks and is capable to divide as it is to unify. This essay shall explore whether there is a need for modern democracies such as the US to cultivate sympathetic sentiment through 3 points of discussion. Firstly, the concept of sympathy propose by Adam Smith will be carefully examined and highlight its importance in the modern era due to the rise of multicultural societies. Secondly, the method of cultivating sympathy is discussed and contend that sympathy proposed by Smith is hard to cultivate in a modern democracy. Lastly, the effects of sympathy will be explored in a contemporary setting and contend sympathy has directly linked to the rise of populist and may create further divisiveness rather than unity. These three discussions will conclude and contend that whilst sympathy needs to be cultivated, the intention and conduct to cultivate sympathy must change as current practices erodes democratic norm.

Adam Smith’s concept of sympathy rejected the Hobbesian view of human nature and introduced an innate ability for people to form understanding and establish commonality. Hobbes saw human nature as pure self-interest. Where man has no regard for others and only operate under its own gains. Smith dismisses such notion and writes, “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of other, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it” (Smith, 1759, p.1). Although Smith too, acknowledges that man can be selfish and motivated by its own desires. He also contends that man naturally holds regards for the happiness of others. Sympathy is a key part of Smith’s moral philosophy and as Choi (1990) has observed, it is the process where moral judgement is made. This process of moral judgement requires imagination, which is a spontaneous projection of our self onto others. Smith highlights we who have no immediate experience of what other men feel and cannot form an idea of the way they are affected. Only through our imagination, we than can form an understanding of their feeling and motives. Through this ability to gauge the emotions of individuals, Smith (1759) then suggests the idea of an impartial spectator, where the individual must step outside of itself and judge their actions and conduct from the vantage of a disinterested figure. This is crucial to Smith’s moral philosophy as unbiased judgement and social interactions establishes the idea of propriety. Not the rules of the sovereign as Hobbes have suggest controlling man from chaos, but the natural desire of man to earn approbation from those unlike as well as those like us. According to Smith, man is fundamentally motivated by the feeling of acknowledgement and the compassion from its fellow citizens. The fear of losing social acceptance and recognition prevents people to act out of socially acknowledged rules that are intrinsic to a society (Kelly, 2009).

As modern democracies in the 21st century has undergone major changes. No longer does it faces the same societal pressures as it were in the 18th century yet new social problems continue to arise. One of the biggest changes is the shift from homogenous societies to multicultural societies due to global interconnectivity. A multicultural society brings forth new challenges such as conflicting social values and beliefs. An example of so is the increasing notion around democracies to implement burka ban. The conservative Muslim culture which requires women to wear a burka has not been welcomed by many western democracies. France and Belgium are amongst others who has initiated a ban. Australia although has not legalized the ban, there has been on-going debate. Australian senator Pauline Hanson claim that wearing the burka is un-Australian and should not be allowed as it promotes Islam fundamentalism (Kelly, 2018). Whilst other who oppose protest the ban under religious freedom and civil liberties. This thereby reflects the difficulty in the accommodation of different societal values. Therefore, modern democracies must go forth and establish method to cultivate sympathy. Either it is through social movement or public discussions. Smith contend “the ‘delightful harmony’ or ‘certain correspondence of sentiments and opinions’ can therefore only occur when ‘there is a free communication’ between them based on ‘frankness and openness’” (Smith, 1976, VII. iv. 28: 337 as cited in Kelly, 2009, p.540). Clark (1992) in his analysis of conversation and the moderation of virtue contends that conversation moderates our passions and our virtues and teaches us to reconcile the interest of other with our own. Only through public discussion and the attempt to redefine propriety, can multicultural societies ensure political liberty and equality for all through the process of mutual understanding.

The cultivation of sympathy is always grounded in social interaction however due to the advancement in communication, the cultivation of sympathy as proposed by Smith may be difficult to achieve. Kelly (2009, p.541) in her commentary regarding the TMS observe judgements about sympathy that are grounded in propriety are always to some degree undertaken in public. However due to technological advancements, private interactions through direct messaging or online forums dominates modern communication. Smith (1970, p.159) argues that “our continual observations upon the conduct of others, insensibly lead us to form to ourselves certain general rules concerning what is fit and proper either to be done or to be avoided”. Whilst this is achievable through mainstream media and public interactions, in the digital age of anonymity, this becomes hard to inform. Within the online medium, anonymity is a privilege that is available for all who can access the Internet. Unlike face-to-face interactions, where if one act out of the social norm, public condemnation is identified to an individual and the shame that arises out of social discord is powerful force that prevents actions of impropriety. However online, the ability to remain anonymous, to adopt an unknown identity eliminates the fear of identification enables which certain individuals to act out of social norms. Whilst their feelings of shame may still arise out of disagreements, the feelings would be arguably significantly less as he is not humiliated in the public realm.

Furthermore, the access to online communication and forums discredits Smith’s concept of establishing propriety through the conduct of others. In theory, if one acts out of propriety, their actions are unable to generate sympathy. This in turn will not persuade and it is always mortifying not to be believed, and it is doubly so when we are supposed to be unworthy of belief (Smith, 1976, VII. iv. 25–26: 336 as cited in Kelly, 2009, p.540). By following this logic, individuals who are unable to find others who share their own ideals are then prompted to reconsider its beliefs. However, through the power of the Internet, global interconnectivity has enabled individuals of all ideals to locate one another with relative ease. The recent rise in anti-vaccination groups and white supremacist movement act as evidence. For these individuals who hold racist and anti-vaccine beliefs, the daily shame they experience in the public realm is alleviated online where they can reconsolidate their beliefs with others who can actively provide sympathy and compassion. These interactions reinforce their dangerous ideals and provide them with a sense of legitimacy as their once condemned beliefs become applauded by a community. Whilst it’s recognized, that online platforms are also capable in producing a positive cultivation of sympathy in areas such as climate change movements and civil movements promoting LGBT rights. The dangerous unchecked cultivation of sympathy approving of malicious intents is a salient concern that must be addressed.

Current day sympathy has transformed in a way that warrants greater levels of concern rather than reassurance. Instead of unity, the rise of populists and Brexit movement has all pointed to the erosion of democratic norms. Smith’s concept of sympathy is experiential rather than logical. Therefore, if the imagination of the people become distorted, corrupted, then our capacity for sympathy might be misdirected, particularly if we are deluded (Kelly, 2009). Smith has pointed out that sympathy may not always be accurate. In fact, man can go become self-delusional, where they are unable to accurately assess their action from the eyes of others. Thereby unable to identify what action are good or bad. Trump’s rise to power redefined how sympathy is defined. Instead of finding common grounds and similarities, trump turns away from conventional political character and creates an authentic image by disregarding democratic norms. Muirhead (Rubenstein, 2018) in his analysis proposed the popularity of trump lies in the trend where broad coalitions are unable to respond adequately to the diverse demands of voters. Middle class white Americans serve as a good example for his argument. Due to the inability of Washington elites to adequately propose policies that benefit their community (Rubenstein, 2018), facilitated a preference for Trump. Trump unlike other politicians refuses to adopt political correctness but focuses on facilitating an us vs them political climate. He appeals to its audience by validifying their anger and their resentment towards immigrants and the Washington elite through his xenophobic and racist undertone which reinforces the pure people vs the elites. Followed by how he sells America as an exclusive club whose greatness is achieved by keeping others out (Dovi, 2018), appealing to the feeling of superiority that brings satisfaction to those such as middle-class white American who believes they have been disenfranchised. Furthermore, Trump’s ability to express citizens’ frustration and anger with the status quo is crucial to his success. The way he can represent the frustration and rage of those who are who are disgruntled, alienated, and fed up with the politics as usual could not be emulated by another politician. These elements all made Trump attractive. However, the most important element to Trump’s attraction was his ability to provide compassion and affirmation to those who share socially unattractive views. Smith articulated that man learn what is right or wrong through social interaction yet that does not mean man is not stubborn. Act and beliefs against social norms may be condemned but that does not mean one can just abandon it. When their anti-democratic values suddenly become acceptable, this reinstalls confidence and reassurance for the values who were disregarded to be brought back into society.

Trump was able to cultivate the feeling of sympathy as a weapon for his own political gain by dividing the American population. Yet this process has undermined democratic principles of liberty and equality. This brings forth the question whether sympathy should be cultivated, and the answer is yes. However, the sympathy we must cultivate birth from liberal ideals such as peace and collaboration. To resolve a period of malicious sympathy, one must cultivate sympathy not through condemnation but through understanding and the introduction of new emotional satisfaction.

Whilst it is important for modern democracies to ensure political equality and liberty, it must also recognize the importance of cultivating sympathy. Sympathy is a moral concept introduced by Adam Smith which details the process of an individual attempting to understand the emotion of another through imagination. By doing so, individuals can judge a moral action against an immoral one. Sympathy needs to be cultivated in a modern democracy as it is necessary to integrate multicultural societies. However, the process of cultivating sympathy may be difficult and dangerous due to the usage of online communication. Lastly, the effects of sympathy may serve to divide rather than unify as shown in the case of Trump. However, despite the dangers, sympathy must be cultivated and in a way that can promote rather than erode democratic norms.

References

1. Clark, H.C., 1992. Conversation and Moderate Virtue in Adam Smith’s Theory of Moral Sentiments. The Review of Politics, 54(2), pp.185-210.
2. Kelly, D., 2009. Time for Sympathy: Some Thoughts on the 250th Anniversary of Adam Smith’s Theory of Moral Sentiments. New Political Economy, 14(4), pp.535-543.
3. Kellly, J. (2019). Pauline Hanson Labels Feminists ‘Pathetic’ on Burka Ban. [online] Theaustralian.com.au. Available at: https://www.theaustralian.com.au/nation/politics/pauline-hanson-labels-feminists-pathetic-on-burka-ban/news-story/370cc98ad66e0d9f2ab69cac412f0a81 [Accessed 27 Sep. 2019].
4. Reagan Library, 2016, President Reagan’s Address to British Parliament, June 8, 1982 https://www.youtube.com/watch?v=Gm35tFTtsuc [Accessed 30 Sep. 2019 ]
5. Rubenstein, J., Dovi, S., Pineda, E.R., Woodly, D., Kirshner, A.S., El Amine, L. and Muirhead, R., 2018. Political and Ethical Action in the Age of Trump. Contemporary Political Theory, 17(3), pp.331-362.
6. Smith, A. (2019). The Theory of Moral Sentiments, Adam Smith 1759. [online] Marxists.org. Available at: https://www.marxists.org/reference/archive/smith-adam/works/moral/index.htm [Accessed 30 Sep. 2019].

Remember when like a year ago when ‘Toms’ were a must-have wardrobe staple? Well, where is that pair now? Where is that flared purse charm you wore just once to that music festival? We live in a world where fast fashion is momentary, and consumer behavior and trends change faster than manufacturers can keep up. Let’s traceback that one funny t-shirt you bought to wear just once to that office Christmas party. Why do you think it costs only 5 dollars at H&M? It was not made by a middle-aged 9 to 5 factory worker in America but probably by a twelve-year-old girl in Bangladesh skipping school to work 12 hours a day, paid next to nothing, only to keep up with our spontaneous fashion trends. One can be fast to point out the flaws of such a capitalist society that prioritizes profit over communal welfare, but who is to blame? What does the father of capitalism have to say about our unsustainable fashion choices? Before we are quick to attack Smith for the predicament we find ourselves in today, we must first turn to him, for without him it is impossible to find the root of the problem itself.

One important distinction we need to make between Smith’s idea of a free market and our popularized negative connotation to profit-oriented capitalism is that he argued against mercantilism and for a self-operating free market where people work according to their self-interests. To quote Smith himself, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. The factory worker in Bangladesh does not make the t-shirt because she feels she owns us but merely out of her own self-interest. We all promote public interests throughout our own economic choices. This is the fundamental ideology of Adam Smith arguing for a self-correcting free market economy in Smith’s ‘The Wealth of Nations’.

So, what is in it for the low wage workers? If these low wages and horrible working conditions are so unfavorable, why are they not outlawed? What most of us fail to comprehend is the cultural and economic differences between middle-income countries and developed countries. People have chosen to work at these factories because they feel that it is better than the alternative. This is where Smith’s theory of division of labor comes into play. In a broader sense, the low wage worker contributes to the economy with his/her skills of stitching garments while someone else comes with the technology of dying the fabric or distributing it. By doing what we are best at, the economy reaches maximum efficiency. This is a form of voluntary trade that the workers opt to participate in since it is more favorable than the alternative, often agriculture or subsistence farming, which is a far more dangerous line of work. It would be unreasonable to compare the earnings of a garment worker in Bangladesh to that of a worker in the UK, for instance, because their economic situations are not the same. Not only is this favorable for the workers, but the garment industry also makes up the majority of export earnings for developing countries like Bangladesh. For countries like this, these industries allow for rural to urban migration, allowing room for a better standard of living, education, and livelihood. Their individual need for fulfillment can, in turn, lead to prosperity for the nation. So, what would Adam Smith have to say about outsourcing to cheaper countries? Well, he would say yes, it makes all the financial and economic sense to do that. In this theory about the specialization of trade and division of labor, he explains how this concept is mutually beneficial because by maximizing efficiency, we are maximizing profit, which is what it all eventually boils down to.

Some may argue, this was work was written in a pre-industrial revolution context in a country that was developing at a different pace and under different political dynamics than developing countries today, where the majority of the production is based today, which is why the outcomes are expected to be dramatically different today. Let’s look back at countries like the US, Japan, and German that have evolved out of low wage manufacturing toward high skilled labor. One might expect developing countries today not to have the same outcomes considering the government’s reluctance to step in and change production, but here is why Adam Smith might just have the answer to the question at hand. What happens if the government steps in and starts forcing the industries to change production? Starting from structural unemployment to inefficient production, the economy will no longer be practicing ‘specialization’. The worker will no longer be producing what they are best at, which is a substantial decrease in productivity, leading to a communal welfare loss. Developed countries will then have to take on the work of these sweatshops to keep up with demands, perhaps having to give up producing that country specializes at. This will be detrimental to both nations.

In this modern economy, Smith’s ideology of the economy working on its self-interest to fulfill our ‘needs’ seems almost hypothetical to some people. As consumers, we have now come a long way from fulfilling just ‘needs’ into creating ‘wants,’ and this change in consumer behavior was noticed around the end of the industrial revolution. Writing at the kick start of the industrial revolution, this change was unfamiliar to Smith. Some say not foreseeing the outcomes of the industrial revolution was one of his blind spots. He did not foresee the catastrophic consequences of low waged, unsustainable manufacturing, nor did he support it. Yes, he argued for maximizing profit but never prioritize it over communal welfare and so blaming him for out unsustainable fashion choices today would not be reasonable. In ‘The Wealth of Nations’, Smith puts emphasis on education and pushing beyond what is comfortable and conventional. Claiming people who live a stationary, or stagnant life ‘naturally loses’. So, it is reasonable to assume that Smith expects to these low wage manufactures to one day move to high skilled labor not necessarily through government intervention but over time through a change in consumer behavior and demand. Some may argue that his ideology would only hold the truth in an ideal economy, but these hypotheses are the foundation on which a modern-day capitalist free market economy is based on.

So, what can we do as consumers? Stop buying anything labeled ‘made in Bangladesh’? What exactly would that achieve? Smith would argue that any attempt to resist a free market would lead to detrimental effects for both parties. Let us start with the millions of garments workers that would now be unemployed and forced to return to agricultural labor in rural areas. Developing countries dependent on trade would face an economic crash, huge multinationals would be out of business, and with it, the employees would lose their jobs, and us consumers would be forced to buy clothes from a few stores still in business for unreasonable prices because they would now run a monopoly. Does this seem like a viable solution? Smith would argue that today’s fashion industry is not exactly ‘unsustainable’ as he thinks that society will correct itself in the long run by the forces of demand and supply. So, it really up to us, the consumers, to make sustainable choices, and the market will follow. If we as consumers are willing to pay higher prices for better quality products that we can utilize for more than a season, as we do with moth fast fashion brands, companies will be incentified to stop sourcing the lowest cost and start investing in technology and training for better quality sustainable alternatives. This would not only be beneficial for us, the environment, and the company but also the garment workers who are now being trained to produce high skilled products and can enjoy a better standard of living. As Smith repeatedly emphasized in his work, production is consumer-oriented, so perhaps we should be the change we wish to see in the world.

The market is something that we face every day we are either consumers or producers it’s something you can’t avoid. For example, you run out of apples and you decided to go to the market and get some more apples that automatically make you a consumer. It is everywhere supply and demand. But it all depends on how one perceives it. One quote I can relate in this essay about philosopher Adam Smith is his quote: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner”. And what this quote means to me, it’s that we can all help each other by being interested in our benefit at the end of the day. We all are a large community and we all need each other to move forward just like a farmer sells its product at a fresh market. We also need to realize that as consumers we go there and buy it because we need it or maybe we want it, because if we didn’t, the farmer will never sell or be there in there in the first place. Furthermore, we as consumers demand this product. Even though the farmer is benefiting from the money he gets after selling his product we also need to realize as a consumer that we are demanding for it too. Moreover, he mentioned that “self-interest is only half of the picture”, and this is true. He explains that even though there are ruthless profit individual that would like to take advantage on certain situation on the market, it also has a way of being regulated back to normal, because if this ruthless individual decides skyrocket his product, society has a way to get rid of him. In other words, he would either end up with someone that’s either trying to compete with him in the same level by rising prices, but also would get to a point in which he could not raise the price of this product because no one would buy it. And if he decided to mistreat his employees by taking advantage, no one will like to work for him.

In conclusion, I think Adam Smith’s theory makes sense and society decides whether the market will go up or down. Different generations change the market depending on what is more fashionable or useful at that time. Products become popular or unpopular as technology advances.