Adam Smith’s View of the Economy


“It may, too, be of some use to the public, in regulating the pecuniary (financial) reward of some of its inferior servants.  If this rise in the price of some sorts of provisions be owing to a fall in the value of silver, their pecuniary reward, provided it was not too large before, ought certainly to be augmented in proportion to the extent of this fall.  If it is not augmented, their real recompence will evidently be so much diminished.  But if this rise of price is owing to the increased value, in consequence of the improve fertility of the land which produces such provisions, it becomes a much nicer matter to judge, either in what proportion an pecuniary reward ought to be augmented, or whether it ought to be augmented at all.  The extension of improvement and cultivation, as it necessarily raises more or less, in proportion to the price of corn, that of every sort of animal food, so it necessarily lowers that of, I believe, every sort of vegetable food.” – Adam Smith, “The Wealth of Nations.”

While it’s not quite a call for a minimum wage, it is a call for regulation and oversight of a kind of minimum standard of living, based upon the value and abundance of the necessaries of the economy (in this case, Smith talks primarily about the value of food, since without it, there is no way to produce any other economy).  Not only is Adam Smith not entirely about deregulation, he’s also much more concerned about improving the quality of life for the majority of the human population, not the standard of living for just the top who own most of the wealth in the economy.

He IS against the regulations in the economy that turn the whole of the economy into an exploitative binging spree for those who own the means of production (for example, the old Guild and Corporate Laws of the 18th century), and he defines value in the economy as that which produces the most amount of necessary supplies for survival (food, water, etc) rather than on monetary wealth alone.

If I were to break down Adam Smith’s prioritization of economy, I would say that the first priority would be agriculture and food/water production, the next would be healthcare, education of all varieties (vocational/non-academic included), raw materials extraction, industrial manufacturers and, finally, service oriented jobs which come out later in the development of the economy and abide throughout all stages of the economy’s development, more or less.

It is when the economy increases in complexity and functionality that new wealth and VALUE is created (so long as it’s being produced in such a way that doesn’t hurt the society, the economy or the environment).  Furthermore, that value and wealth doesn’t necessarily have anything to do with the value of money or other precious metals which we might use to measure wealth, but rather, it has everything to do with its utility for humanity’s well being, health and quality of life.

Perhaps we should go to a Food Standard, rather than a Gold or Silver Standard….

Think about it!


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