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TWoN Chapter 10 Part 2

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The discoveries of Newton were significant advances for his time.  Anyone today using Newton’s laws must be careful to consider where they may be applied, and where further developments of science have negated them.  When the science under consideration is political economy, then the state of the society in which the author wrote is a vital factor.  This section has brough this point very sharply to mind.  Here Smith is speaking of regulations that limit trade, and his obervations and conclusions are splendidly sharp (and, in some cases, more biting than he has been previously).  But if we forget that Smith was writing about the beginnings of market economy, and against the remnents of the the fuedal forms that held it back, confusion is the only possible result.

More precisely, Smith in this section argues against corporations by which, I believe, he refers to guilds in similar associations (in any case what he speaks against is not the corporation in the modern sense of the term) and against laws that protect them.  Page 164: “The exclusive privilege of an incorporated trade necessarily restrains the competition, in the town where it is established, to those who are free of the trade.”

He speaks out, in particular, against efforts to limit the number of apprentices in a trade.

On page 175, he speaks of husbandry as requiring more training and skill than nearly any other trade.  “The man who works upon brass and iron, works with instruments and upon materials of which the temper is always the same, or very nearly the same.  But the man who ploughs the ground with a team of horses or oxen, works with instruments of which the health, strength, and temper, are very different upon different occasions….The common ploughman, though generally regarded as the pattern of stupidity and ignorance, is seldom defective in this judgment and discretion.”

On page 177: “People of the same trade selcom meet together, even for merriment and diversion, but the conversation ends in a conspiricy against the public, or in some contrivance to raise prices.”  (It was especially pleasant to come across this after hearing Leonard Nimoy recite it in Civ IV so many times).

Page 178: “The pretence that coproations necessary for the better government of trade, is without any foundation.  The real and effectual discipline which is exercise3d over a workman, is not that of his corporation, but that of his customers.”  If I am correct that by corporation he refers to guilds; or perhaps to some special form of combinations of guilds, then this is makes perfect sense.

On page 182 he speaks of teaching.  “And this is still surely a more honorable, a more useful, and in general even a more profitable dmployment that that other of writing for a bookseller.”  Hee hee.  “Before the invention of the art of printing, a scholar and a beggar seem to have been terms very nearly synonymous.”

Page 185: “The statute of apprenticeship obstructs the free circulation of labor from employment to another, even in the same place.  The exclusive privileges of coporations obstruct it from one place to another, even in the same employment.”

Page 186: “Whatever obstructs the free circulation of labor from one employment to another, obstructs that of stock likewiwse; the quantity of stock which can be employed in any branch of business depending very much upon that of the labor which can be employed in it.”

Page 195: “Whenever the legistlature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters.  When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when it is in favour of the masters.”

Page 196: “When masters combine together in order to reduce the wages of their workmen, they commonly enter into a private bond or agreement, not to give more than a certain wage under a certain penalty.  Were the workmen to enter into a contrary combination of the same kind, not to accept of a certain wage under a certain penalty, the law would punish them very severely; and if it dealt impartially, it would treat the masters in the same manner.

corwin

Author: corwin

Site administrative account, so probably Corwin, Felix or DD-B.

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  1. “Whenever the legistlature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when it is in favour of the masters.” is perhaps the single truest statement about economic legislation ever made.

  2. In Smith’s time, a “corporation” was a government-granted and legally enforced monopoly, and that’s what he’s arguing against. Guilds would be one example, but there were other kinds of corporations — for example, the mercantile corporations such as the East India Company. Limited liability corporations in the modern sense didn’t emerge until the 19th century.

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