Sudden disruption

by Russ Roberts on May 15, 2009

in Work

Here is Adam Smith speculating in The Wealth of Nations on the dynamic nature of the British labor market if all tariffs and barriers to imports were removed. Surely, there would be mass unemployment and catastrophic disruption. Not so, says Smith. And he uses a very elegan natural experiment to make his case:

Secondly, though a great number of people should, by thus restoring the
freedom of trade, be thrown all at once out of their ordinary
employment and common method of subsistence, it would by no means
follow that they would thereby be deprived either of employment or
subsistence. By the reduction of the army and navy at the end of the
late war, more than a hundred thousand soldiers and seamen, a number
equal to what is employed in the greatest manufactures, were all at
once thrown out of their ordinary employment; but, though they no doubt
suffered some inconveniency, they were not thereby deprived of all
employment and subsistence. The greater part of the seamen, it is
probable,
gradually betook themselves to the merchant-service as they could find occasion, and in the
meantime both they and the soldiers were absorbed in the great mass of
the people, and employed in a great variety of occupations. Not only no
great convulsion, but no sensible disorder arose from so great a change
in the situation of more than a hundred thousand men, all accustomed to
the use of arms, and many of them to rapine and plunder. The number of
vagrants was scarce any-where sensibly increased by it, even the wages
of labour were not reduced by it in any occupation, so far as I have
been able to learn, except in that of seamen in the merchant-service.
But if we compare together the habits of a soldier and of any sort of
manufacturer, we shall find that those of the latter do not tend so
much to disqualify him from being employed in a new trade, as those of
the former from being employed in any. The manufacturer has always been
accustomed to look for his subsistence from his labour only: the
soldier to expect it from his pay. Application and industry have been
familiar to the one; idleness and dissipation to the other. But it is
surely much easier to change the direction of industry from one sort of
labour to another than to turn idleness and dissipation to any. To the
greater part of manufactures besides, it has already been observed,*62
there are other collateral manufactures of so similar a nature that a
workman can easily transfer his industry from one of them to another.

Be Sociable, Share!

Comments

comments

30 comments    Share Share    Print    Email

{ 15 comments }

vidyohs May 15, 2009 at 7:31 pm

"The manufacturer has always been accustomed to look for his subsistence from his labour only: the soldier to expect it from his pay. Application and industry have been familiar to the one; idleness and dissipation to the other."

Adam may have been a good 'ole boy but this is a dim and ignorant view of a military man's life during a time of conflict. Perhaps of a garrison soldier, but not of those who expect to be on the front lines soon, or are veterans of the front lines. Let Adam train for combat and let us then ask his opinion of whether a soldier labors or not.

God knows I could have used some of that good 'ole idleness and dissapation at many a time of my career. ;-D

It is interesting, however, to see testiment to the fact that vast amounts of manpower can be absorbed into society and extremely little ill effects are demonstrated.

Capitalism, free markets, and trade; gotta love it.

K Ackermann May 15, 2009 at 7:54 pm

Jesus Christ! I'm in agreement with vidyohs.

I need another anti-deptressent.

vidyohs May 15, 2009 at 8:06 pm

Hang around with an open mind, K Ackerman, and it will happen again, I assure you.

I am a dumb-ass Texas street guy, but I have ciphered up me some stuff, you betcha.
;-D

K Ackermann May 15, 2009 at 8:47 pm

I'm an olde tyme Boston yankee with a new Oregon attitude.

The Oregon motto is:

For f***s sake,
Leave me alone,
Live your life,
I'll live mine.

vidyohs May 15, 2009 at 8:54 pm

Gotcha bro. Good motto.

Mine is "Find a way, or make one."

Course in there is being left alone as well.

BTW, I spent a year in the Framingham, Natick area and outside of the fact that I could not get my house sold and my wife and kids up there, it was one of the best years of my life.

I played and ref'd a lot of sports back then and there was no end of great people to know and hang around with.

If you wanted a conversation just ask out loud how the……."season team" did last night or yesterday. You had an instaneous group discussion on the spot.

ardyan May 15, 2009 at 10:15 pm

Ok, so Smith had some wonderful insights for his day. But he had little empirical evidence to base his opinions on, so who could have predicted his ideological victory? Couldn't Marx have just as easily been the victor? (my apologies if this question has already been asked)

brotio May 16, 2009 at 1:51 am

"Couldn't Marx have just as easily been the victor?" – Ardyan

Ardyan,

Adam Smith was observing human nature. Marx ignored human nature, and wrote about what he thought it ought to be.

Gil May 16, 2009 at 2:15 am

Wasn't Marx the victor during the 20th century?

ardyan May 16, 2009 at 9:56 am

Marx ignored human nature, and wrote about what he thought it ought to be.

Did he really? I believe that they were both observers of human nature, their main differences being that Smith had a lot of faith in markets and human self-interest whereas Marx was more skeptical, believing that markets would drive wages down to the point where people would revolt against bourgeoisie.

vidyohs May 16, 2009 at 11:03 am

"Marx was more skeptical, believing that markets would drive wages down to the point where people would revolt against bourgeoisie.

Posted by: ardyan | May 16, 2009 9:56:20 AM"

Unfortunately for Marx, this never happened.

Which strengthens Brotio's case immeasureably against your argument.

ardyan May 16, 2009 at 12:35 pm

Wo, ho, ho, hold on. I am making no argument for Marx here. I am simply wondering if it was simply by Smith's good fortune that he was generally correct, or if there was some inherent reason for capitalism's success.

Believe me, I'm glad the U.S. didn't turn into some Soviet satellite.

Sam Grove May 16, 2009 at 1:51 pm

I am simply wondering if it was simply by Smith's good fortune that he was generally correct, or if there was some inherent reason for capitalism's success.

Marx envisioned an engineered society in which humans would act as selfless creatures and work for the benefit of their fellow selfless creatures.

As anyone with functioning brain cell should know, humans are not selfless creatures, nor will they ever be, and the only way you can get them to work for their fellow humans is if they can profit from said labor.

Humans are often willing to sacrifice…others, but rarely are they interested in sacrificing themselves, except for that which they value very highly, for example, their children.

vidyohs May 16, 2009 at 2:54 pm

"Wo, ho, ho, hold on. I am making no argument for Marx here.
Posted by: ardyan | May 16, 2009 12:35:38 PM"

My bad?

"Marx ignored human nature, and wrote about what he thought it ought to be."

Considering Marx was so intensely, vastly, decidely wrong, could it be said that he was an equal observers of human nature on par with Adam Smith, or is Brotio correct in that Marx may have looked at humans but he definitely misinterpreted what he saw, and then formulated all his theories on his misinterpretation? In other words, "what he thought it ought to be".

Frankly, I put Marx on the same shelf with Freud, both were hucksters, and both developed theories that sucked in the weak and lazy; theories designed to excuse failures and make them appear normal or even noble. Marx and Freud may be the two most long term destructive people in the history of mankind.

Gil May 17, 2009 at 2:28 am

"Unfortunately for Marx, this never happened." – vidyohs

But what of the rise of the welfare state and trade unions during the 20th century?

Chuck May 17, 2009 at 3:48 am

"…all accustomed to the use of arms, and many of them to rapine and plunder."

Amazing how frankly he spoke. Can you imagine any prominent pundit saying something so politically incorrect today?

Previous post:

Next post: