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Student ID Number: 1439528 Programme Of Study: International Relations with Economics Module: History of Economic Thought 08 29183 Assignment Title: Assignment 1 Date and Time of Submission: 3rd December 2016 (18:16) Name of Module Leader: Dr Keith Tribe Please ensure that you complete and attach this Submission Form to the front of all work that is submitted online. Before submission, please ensure that your name does not appear anywhere on your work, only your Student ID number. By submitting your work online you are confirming that your work is your own and that you understand and have read the University’s rules regarding plagiarism and the consequences that will arise should you submit plagiarised work.
Adam Smith, “Introduction and Plan of the Work” in his Wealth of Nations
Adam Smith’s concise ‘Introduction and Plan of the Work’ (Cannan, 1904)
presents a labour productivity story, mainly for professional men to consume,
developed throughout ‘An Inquiry into the Nature and Causes of the Wealth of
Nations’. Smith provides his introduction in just four paragraphs and then
devotes a paragraph to each of the five books within the work. Apart from
Smith’s overview of Book IV, his section on the plan of the work accurately
reflects the contents of his books. Interestingly, Smith’s own introduction
refrains from mentioning the invisible hand, competition, markets, self-
interest, laissez faire and the system of natural liberty. Many academics
(Naverson, 2003; Wright, 2007; Bradley 2010; Kurz, 2016) have focused
almost exclusively on a part or a collection these ‘famous’ passages of Smith’s
work and largely ignored other areas of the piece. Smith’s omission of the
well-known aspects of Wealth of Nations (WN) in his introduction allows him
to present a structured argument that resonates throughout the work about
the productivity of (productive) labour as the source of a nation’s annual
wealth. Smith provides an introduction with the omission of famous aspects of
his work to focus on the most important themes of the work.
The first paragraph of Smith’s introduction (Cannan, 1904) is one sentence
and it uses perspicuous language to outline the nature of the annual wealth of
a nation. Firstly, Smith writes in annualised terms, this means his analysis can
be used to compare the wealth of a nation to itself in previous years – hence,
the growth in wealth of a nation can be observed. Secondly, Smith identifies
that what is consumed annually are necessaries and conveniences. For Smith,
necessaries are goods required for subsistence, whereas conveniences are
luxuries. Thirdly, the annual wealth of a nation is the annual labour of that
nation. Hence, all necessities and conveniences are a direct product of the
annual labour of a nation. Moreover, necessities and conveniences can also be
imported – paid for by the produce of labour that is exported. The importance
of Smith’s first sentence cannot be overstated as it is a key pillar throughout
his entire work. Smith purposely introduces his main themes in his
introduction and does not mention his ‘famous’ passages because they
successfully build upon his main themes later in the work.
Paragraph two of Smith’s introduction observes the supply to a nation
depends upon the ratio between produce and population– this is a per capita
idea. In paragraph three, Smith expands that the distribution of produce
among its population is determined by labour productivity (skill, dexterity and
judgment), productive and unproductive labour. Smith has a physicalist
conception of labour. Broadly, smith views labour that produces a service as
unproductive; whereas, labour that produces a good is productive. Smith later
qualifies this distinction between productive and unproductive labour with an
example of unproductive labour in Book II, Chapter III of WN: “Like the
declamation of the actor, the harangue of the orator, or the tune of the
musician, the work of all of them perishes in the very instant of its
production” (Cannan, 1904, p. 281). Smith’s argument about unproductive
labour is that it vanishes the moment it is produced. Smith clearly builds upon
his introduction when he qualifies his original assertions. For Smith, the
distinction between unproductive labour and productive labour is critical;
hence, the distinction is made in his introduction, as opposed to his ‘famous’
passages which are not in his introduction.
After introducing the nature of the WN in paragraph one to three, Smith turns
his attention to the causes of the WN in paragraph four. Smith argues that in
thriving nations necessaries are quickly met due to frugal and industrious
individuals’ want to improve. Smith makes a distinction between animal
instinct for preservation and the human sense of vanity, ambition and
progress. For Smith, the latter is the cause of the WN. Therefore, in thriving
nations, more unproductive labour (for services) can be supported as the need
for necessaries are already met. The rest of Smith’s work in the WN builds
upon human nature as the cause for the WN. In Book I, Chapter VII, Smith
writes of a developmental path in which the demand for labourers increases as
the wealth fund of a nation increases. As more labourers are employed, more
surplus value is created – in turn, this surplus is used to increase the number
of labourers. This continuity between Smith’s introduction and the rest of the
WN allows him to carry his reader though a logical route of explanation.
Smith finishes his concise introduction by the end of paragraph four. The rest
of the ‘introduction and plan of the work’ is devoted to providing a clear plan
of the work. Firstly, Smith briefly, yet appropriately, notes that his first book
examines the productive powers of labour and its distribution among men in
society. Smith later expands on this topic in Book I with the division of labour
(enhancing labour productivity) and individuals’ contributions to useful
production to distribute labour’s produce among men. Smith successfully
expands upon his plan of the work in Book I. Therefore, in this case Smith’s
plan of the work can be considered successful in its ability to provide an
accurate reflection of Book I.
Furthermore, Smith’s overviews (in the plan of the work) of Books II, III and
V can be considered successful as they provide an accurate reflection of the
contents of their respective books. Smith reiterates, in the paragraph on Book
II, that the abundance or scantiness of a nation’s supply depends on the
proportion of labour that is employed in productive labour (as opposed to
unproductive labour). Book II in WN further explores this relationship,
introduced in the plan of the work, between a nation’s supply as the ratio of
productive labour to unproductive labour. Smith’s paragraph in the plan of
the work for Book III notes that since the Roman Empire, European nations
have promoted industry in towns over agricultural produce in the countryside.
Expanding, Smith explains that the wealth of a nation is enhanced by having a
higher proportion of labour devoted to industry in towns compared to
agriculture in the countryside – for agricultural produce it is difficult to reap
the benefits from the division of labour. Smith states he will explore the
causes of Europe’s policy to focus on industry in towns rather than
agricultural produce in the countryside. Smith’s overview of Book III, as for
the books that precede it, provides a fitting reflection of its contents.
Furthermore, Book V is the last book that Smith provides an accurate
overview for in his plan of the work. Smith states, in his overview, book V aims
to identify what the necessary expenses of a sovereign are and how they are to
be defrayed by society. Secondly, Smith writes that he aims to investigate the
different methods (such as a tax) in which a society may be made to contribute
towards defraying necessary expenses – each method will be evaluated to
determine their principle advantages and inconveniences. Thirdly, Smith aims
to identify the causes of governments to mortgage some part of this revenue,
or contract debts, and the effect this has on real wealth (annual produce).
Smith’s overview of Book V in the plan of the work is an accurate reflection of
the contents of the book because the book first explores costs that effect the
whole of society, such as Defence, Justice, Public Institutions. Book V then
investigates the best ways to defray those costs to society. Finally, Smith
studies Public debts and the effect these have on a Nation’s annual output.
Cleary, for Book V Smith sets out, in his plan of the work, a path that the book
follows carefully.
Contrastingly, Smith’s overview of Book IV is inaccurate. Midway through
paragraph eight in Smith’s plan of the work, Book IV is introduced as an
inspection of varying theories of political œconomy that gave rise to different
policies; however, Smith spends very little time summarising the literature
that precedes him in Book IV. Instead, Smith uses Book IV to further develop
his own arguments. Therefore, unlike the rest of Smith’s plan of the work
(where Smith accurately outlines Books I, II, III and V), paragraph eight fails
to provide an accurate description for the content of Book IV.
In conclusion, Adam Smith presents a concise overview, in four paragraphs, of
his labour productivity story in the ‘Introduction and Plan of the Work’.
Smith’s introductory story assumes the productivity of (productive) labour as
the source of a nation’s annual wealth – as developed throughout WN. In the
first two paragraphs smith conveys the main theme of the WN to the
professional male reader. To be concise in his introduction, Smith omits well
known aspects of his work, that many modern academics have explored, to
present a logical path for the reader to follow. Apart from Smith’s overview of
Book IV, his section on the plan of the work accurately reflects the contents of
his books.
Bradley, M. (2010) ADAM SMITH’S SYSTEM OF NATURAL LIBERTY:
COMPETITION, CONTESTABILITY, AND MARKET PROCESS.
Journal of the History of Economic Thought, Vol. 32, no. 2, pp. 237-262.
Cannan, E. (ed.) (1904) An Inquiry into the Nature and Causes of the
Wealth of Nations by Adam Smith, edited with an Introduction,
Notes, Marginal Summary and an Enlarged Index. Available from:
http://lf-oll.s3.amazonaws.com/titles/237/Smith_0206-01_EBk_v6.0.pdf
[Accessed: 16th November 2016]
Kurz, H. D. (2016) Adam Smith on markets, competition and
violations of natural liberty. Cambridge Journal of Economics, Vol. 40,
no. 2, pp. 615-638.
Naverson, J. (2003) The “Invisible Hand”. Journal of Business Ethics, Vol.
46, no. 4, pp. 201-212.
Wright, J. B. (2007) The Treatment of Smith’s Invisible Hand. Journal
of Economic Education, Vol. 38, no. 3, pp. 341-358.
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