As I have written in the previous article on this topic, the last surprise from my first reading of the Wealth of Nations, was Smith’s acknowledgment of the bad side-effects of the division of labor, although the division of labor was the main point of his discourse.
A great chunk (if not the most) of the book was dedicated to demonstrating how economic growth is based on the division of labor when a complex job is broken down into smaller steps, parts, and operations. If you read the book from the beginning, you get an impression that that was the hymn to that manufacturing breakthrough. The style is not modern though, so one gets somewhat bored and quite sleepy by the end. Then suddenly — boom! — you wake up like from a thunderstorm by reading the following:
The man whose whole life is spent in performing a few simple operations… His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilized society, this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.
That is quite a statement for the “founder of capitalism” and the inventor of “invisible hand”! It forced me to step back and re-evaluate the image of Adam Smith I had before.
Despite all the modern references to Adam Smith as the promoter of the free market, he was not pushing it all. Yes, he favored a more effective way of production using the division of labor, but in his view, it had to be done under the close supervision of a government that cares about its constituents and makes sure that not only the manufacturers enjoy free flow of the products (also internationally) if it is good for the country, but also that the laborers (the majority of the population) do not fall victims of that new effective manufacturing machinery. Otherwise, speaking in modern terms, they turn into collateral damage to the free market struggle. No, it was not acceptable for Adam Smith.
He advised alleviating the negative consequences of effective manufacturing methods through education financed by the government:
People of some rank and fortune are generally eighteen or nineteen years of age before they enter upon that particular business, profession, or trade, by which they propose to distinguish themselves in the world. … It is otherwise with the common people. They have little time to spare for education. … For a very small expense, the public can facilitate, can encourage and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education.
And we need to do it not just because of the kindness of our hearts, but because, in Smith’s words:
An instructed and intelligent people, besides, are always more decent and orderly than an ignorant and stupid one. They … are … less apt to be misled into any wanton or unnecessary opposition to the measures of government. In free countries, where the safety of government depends very much upon the favourable judgment which the people may form of its conduct, it must surely be of the highest importance, that they should not be disposed to judge rashly or capriciously concerning it.
Sorry for the long quotes. I just wanted to make sure that you see yourself what Smith was saying in his own words, so the next time somebody refers to him as the promoter of a “free market” you may ask, “Could you, please, be more specific and tell me what exactly Smith has said on this issue?”