The Invisible Handcuffs of Capitalism: How Market Tyranny Stifles the Economy by Stunting Workers (24 page)

Smith’s perspective of worker-merchants becomes more credible in a world of simpler, craft-like technologies, such as the pin factory, with only a handful of workers. In the large-scale production systems
that were beginning to emerge, the kind of upward mobility that Smith imagined would be impossible. Just as today, a worker consigned to menial labor in a large enterprise, such as a modern equivalent of the Carron works, among thousands of other workers, cannot expect to have a chance to become a CEO.

In conclusion, writing at a time when economists still routinely acknowledged the importance of labor in the production process, Smith gave exchange a more important role in the economy, to obscure questions of class. Workers became exchangers, no different from their employers. In this respect, the absence of the Carron works in Smith’s writings was a clever rhetorical tactic. Although Smith did not go as far as modern economics in excluding work, workers, and working conditions, his recasting of workers as merchants was an important first step in the direction of modern economics.

Individualism

Smith’s reluctance to discuss the Carron works makes sense in terms of his enthusiasm for individualism. Early economic systems, such as slavery or feudalism, looked at the great mass of the population as a class, while consigning the majority to function as unthinking work animals. Smith’s lumping people together with work animals was a residual of this earlier tradition. Not surprisingly, the people society regarded as animals displayed few outward signs of ambitions or aspirations, at least the sort of ambitions or aspirations that would meet with the approval of Adam Smith. The system was certain to dash any hopes of conventional success for the vast majority.

At the same time, Smith welcomed a sign of a different trend emerging. Alongside dangerous mobs of poor people in urban centers, the growing individualism of small merchants and some artisans encouraged Smith. This part of society provided the positive example that was central to Smith’s vision of the future. From this perspective, Smith’s individualism represented at least the possibility of people breaking out of the confining class structure of traditional society. In place of a world
divided along lines of class, everybody would understand their identity as individuals making commercial transactions. In this classless world, all people would have a chance to improve their lot.

Proponents of laissez-faire treated the abstract possibility of social mobility a likely reward for anyone who was willing to work hard. The mere thought of this possibility had such a liberating effect, so much so that the Spanish disciples of Smith’s contemporary, Jeremy Bentham, defined themselves as “liberals”—a new word that has been subsequently redefined several times.

Smith was enthusiastic about the energy of this new individualism. Later commentators associated this energy with the burst of economic activity, commonly described as the Industrial Revolution, but, as mentioned earlier, the Industrial Revolution is absent in Smith’s writings. By now, the reason for this absence is obvious. Although Smith’s liberalism seemed liberating, from a different perspective it must have been disempowering to people who were toiling in the Carron works. Presenting such people as isolated individuals would have accurately conveyed their powerlessness.

Although individualism might disempower most people, Smith recognized that businesspeople knew how to wield their collective power as a class. In Smith’s words:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices. It is impossible to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from assembling together, it ought to do nothing to facilitate such assemblies.
⁶⁸

Although business was organizing for selfish purposes, larger organizational structures can also promote the public interest, giving working people’s desires a greater force. Perhaps more crucial from an economic standpoint, by the twenty-first century, much truly important work requires collaborative and cooperative processes. The
Manhattan Project during the Second World War represents a striking example of the powers of collaboration, although that particular power was destructive.

The government gathered some of the most skilled scientists of the day to rush through the creation of the atomic bomb. One of those scientists, Freeman Dyson, recalled how people later looked back on their experience with the Manhattan Project: “Through all the talk shone a glow of pride and nostalgia. For every one of these people the Los Alamos days had been a great experience, a time of hard work and comradeship and deep happiness.”
⁶⁹
To my knowledge, none of the scientists pushed very hard for recognition of their individual contributions.

Many people regard the Manhattan Project as a major scientific accomplishment. If masses of people rather than just a few elite scientists had the opportunity to participate in such collective action—with the goal of creating productive, rather than destructive outcomes—wonderful things could happen. Unfortunately, the prevailing corporate structure undermines the potential for such productive collaboration.

The Cauldron of Class

Although Smith’s language was less antagonistic toward labor than many of his contemporaries, he was hardly a great friend of workers. For the most part, he merely suggested that once his idealized merchant-workers adopted middle-class values—what he called “a general probity of manners”—they would prosper.
¹
In turn, this personal transformation would produce a stronger economy, along with better people.

Yet what Smith saw occurring around him could not give him much confidence. The rise of market-based industrialization was a juggernaut degrading a large swath of humanity in crowded cities. Smith was not at all pleased when he looked at this wretched mass of potentially dangerous workers huddled together.

These people had little in common with his idealized merchant-workers. Instead, Smith saw them as the raw material for mobs, a vision closer to Ferguson’s than his own: the division of labor was creating deep class divisions rather than integrating everybody into a harmonious society. To make matters worse, this new stage of development seemed to reinforce what Smith regarded as negative
remnants of the pre-commercial stage of development. In particular, Smith was aghast that urban workers, rather than seeing themselves as merchants, still adhered to the continuing, anti-commercial traditions of popular rural justice. Workers insisted that necessities should not sell above what they considered a just price—a traditional attitude that Edward P. Thompson described as the “moral economy.”
²

Smith opposed every aspect of the moral economy. He expressed disgust that these traditional cultural values made poor people feel justified in times of high prices when they would “break open granaries and force the owners to sell at what they think a reasonable price.”
³
Smith condemned the government for passing laws regulating the retail corn trade in order to mollify the populace, although much of this legislation had already been repealed by 1772.
⁴
For Smith, such legislation was every bit as unjustified as the laws regarding religion, although, ironically, Smith himself wanted to regulate religion.

Smith claimed that people’s fear of corn merchants manipulating the market was no more warranted than anxiety about witchcraft.
⁵
He insisted that people recognize that the corn merchants actually served a useful purpose:

By raising the price he [the corn merchant] discourages the consumption, and puts every body more or less, but particularly the inferior ranks of people, upon thrift and good management…. When he foresees that provisions are likely to run short, he puts them upon short allowance. Though from excess of caution he should sometimes do this without any real necessity, yet all the inconveniences which his crew can thereby suffer are inconsiderable in comparison of the danger, misery, and ruin, to which they might sometimes be exposed by a less provident conduct.
⁶

Here, writing during a time of recurrent food shortages, Smith was speculating that the experience of periods of hunger would jolt people to their senses. Such natural workings of trade and exchange should force people to change their behavior to become better aligned with the market economy. Governments certainly should not interfere with this process by regulating the grain trade—not even to prevent starvation.

The Degradation of Work; The Degradation of Workers

Despite his generous remarks concerning the abstract welfare of workers, Smith showed contempt rather than sympathy for their hardships. Although he had little regard for the small, struggling, pre-commercial independent farmers and farm workers, who were also unlikely to see themselves as merchants, Smith still held them in significantly higher esteem than unskilled urban workers. He exclaimed, “How much the lower ranks of the people in the country are really superior to those in the town, is well known to every man whom either business or curiosity has led to converse with both.”
⁷

In lectures to his students about the benefits of the division of labor, Smith observed:

It is remarkable that in every commercial nation the low people are exceedingly stupid. The Dutch vulgar are eminently so…. The rule is general, in towns they are not so intelligent as in the country, nor in a rich country as in a poor one.
⁸

Workers in a small shop, such as Smith’s pin factory, who possibly worked and lived side by side with their master, might not feel as downtrodden as the urban workers, whose behavior so offended him.

Smith was disturbed that modern workers lacked the incentives and opportunities for the kind of individual initiative that more primitive people normally exercise. As a result, they succumb to the “drowsy stupidity which, in a civilized society, seems to benumb the understanding of almost all the inferior ranks of people.”
⁹
He continued: “A man, without the proper use of the intellectual faculties of a man, is, if possible, more contemptible than even a coward, and seems to be mutilated and deformed in a still more essential part of human nature.”
¹⁰

The degradation of work had serious moral consequences that Smith found unattractive. According to Smith:

[When a worker] comes into a great city, he is sunk in obscurity and darkness. His conduct is observed and attended to by nobody, and he is very
likely to neglect it himself, and to abandon himself to every sort of low profligacy and vice.
¹¹

Judging by the relatively little attention he gave to workers’ “low profligacy and vice,” Smith seemed more troubled by their surly class-conscious attitudes. In particular, the seething wrath of the masses of poor people packed into cities horrified Smith. He warned that “in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt (them) to invade property, passions much more steady in their operation, and more universal in their influence.”

Smith continued:

The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of … valuable property can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it…. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary.
¹²

Smith never seemed to notice that rich people might be prospering, in part, because the state permitted and even encouraged measures to deprive people in the countryside of the means necessary to fend for themselves. Pushed into already crowded cities without adequate resources, the oversupply of labor caused low wages and appalling degradation.

Smith’s own teachings suggested that a subsistence wage would be the natural outcome of such an oversupply of labor: “The natural price … the lowest which the sellers can commonly afford to take, and at the same time continue their business.”
¹³

No wonder such people continued their adherence to the moral economy!

A Central Contradiction of Market Ideology

A moment’s reflection should be sufficient to realize that greater consideration of the workers might diminish the pressing need for the effort that goes into protecting the property of the rich. Instead, insofar as workers were concerned, Smith suggested that workers should count on the wonders of the market and their own hard work to secure their future.

Here, Adam Smith reflected a central contradiction of market ideology. Raw capitalism falsely promises maximum returns to the rich and powerful. In truth, some kind of social democratic regime, which takes the harsh edges off of capitalism, is perhaps more effective for extracting profits.

Though Smith seemed to have approved government taking pains to ensure that the rich could sleep in security, he never supported measures to defend the welfare of workers, either inside or outside the workplace. Recall his dogmatic antipathy to the regulation of grain prices. Instead, Smith called for somehow changing the psychology of the lower classes to reconcile them to their condition as merchant-workers, hoping perhaps that improved morale would both eliminate class conflict and increase productivity.