Property Markets and the State in Adam Smith's System

Robert Boyden Lamb

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781315317960
• Topic: Business
• Subtopic: Business General
• Index: Business

This book, first published in 1987, is an attempt to explain Adam Smith's theory of property. The author examines Smith's theory in the context of The Wealth of Nations, and explores what Smith said, what he really meant, and what can be logically deduced from it. This title will be of interest to students of economic thought.

CHPATER VII

ALIENATION OF PROPERTY: THE EFFECT OF INDIVIDUALS

Two diametrically opposed effects of commerce are described by Smith. Firstly, it established useful routines for working behaviour and institutions and for market standards of exchange. But at the same time commercial society intensified the harmful effects of class conflict, and of extreme division of labour on industrial workers of all kinds. In this chapter we will consider these contrasting effects of commerce upon individuals and review Smith’s explanation for them.

I

Smith presents a schematic commercial society composed of equally independent individual merchants. He also outlines the existing class structure in which individuals’ desires were submerged within economic group interests. Although each man may be a merchant, what a man has to sell in this commercial society determines his interests and his position in the broad class structure. This differentiates one class of individuals who sell their labour and have no other property to sell, from the landlord and capital owner who can sell or rent their capital or landed property to purchase the labour of others.

In his abstract social scheme Smith says almost all men are totally dependent on others for their supplies in commercial society. Yet most men are “personally independent”; that is, they do not depend on one single other individual for their subsistence, but on many.¹ In Smith’s factual description menial servants are the only completely economically-dependent group of labourers in commercial society. Wage labourers are dependent to some degree, but not in the same way as a feudal serf. Smith’s schematic description of the commercial individual is only incidentally mentioned in connection with his historical class analysis. Usually the two methods are employed for strictly separate purposes and in entirely different contexts.

A commercial society is divided into a large number of different groups² which share not only common economic interests but also similar morals, characters and social rank.¹ Group members sympathise more easily and completely with each other. The social status of a group depends on other people’s evaluation of it, and this in turn reflects mainly its wealth and power.²

Commercial society consists of three main groups: landowners, merchants, and labouring poor.³ But Smith provides a much more detailed breakdown of its constituent groups which I have listed in a footnote below for the sake of brevity.⁴ The three main classes, in Britain during Smith’s life formed a social scale or hierarchical structure. But in contrast to France⁵ and to other continental countries, there was considerable intermingling and great fluidity within classes and a degree of mobility up and down the class structure¹ According to Ashton:

These class gradations were rungs of a ladder on which many climbed and descended … the rungs were many and closely spaced making it easy for ability to be equated with task.²

Ashton goes rather far in his assertion of the fluidity of classes in 18th century England.³ He appears to equate the extreme intra-class mobility within each strata which did exist, with extreme inter-class mobility between rich and poor which was relatively limited. J.H. Plumb in The First Four Georges asserts that “The majority had a profound sense of the laws of subordination.”⁴ And later he spells this out:

Free and mobile as the English Society was, compared with other European countries, it was nevertheles very rigid by modern standards. The theme of many people’s lives was fixed by birth. They stayed in the village in which they were born and pursued those avocations in which their fathers and grandfathers had been employed.¹

In Scotland, among the highland crofters and fishermen there continued the same social class relations that had persisted for centuries throughout much of northern Scotland. Only in the lowlands and particularly in the cities of Edinburgh and Glasgow was there really significant fluidity within classes and some upward mobility. In all the ancient walled towns such as Edinburgh rich and poor shared the same staircase in their tall tenement apartments. The Judge or rich merchant was distinguished by inhabiting the middle, not the upper or lower floors. These notoriously unpleasant tenements caused a similarity of social experience in this period which disappeared when the New City of Edinburgh was built and the rich en masse left the “old city” to the poor. In Glasgow the considerable growth of the city in population and wealth during the eighteenth century of necessity caused an extraordinary intermingling of classes. The good parish schools too may have led to a certain blending of strata within the middle class especially. And of course class fludity accompained the tremendously rapid transformation of Scotland from a stagnant rural backwater to a thriving commercial economy in the space of scarcely one generation in the 18th century.²

In Smith’s works there is a recognition of considerable mobility within classes and to some extent between classes in his extensive descriptions of tasks and professions as “confounded”. By calling many tasks “confounded” Smith meant that the primitive state of industry, manufacturing, and merchant trading was such that the same man often performed many of the different roles and tasks which in more advanced commerce are separated and singular. In Scotland, a man of mixed profession¹ was even more common than in England,² for poverty had required that each man hold more than one job. Few shepherds or farmers could subsist without fishing or gathering kelp. And most tradsmen, manufacturers, and merchants kept a small garden and some animals. Furthermore, according to Smith the majority of a Scotsman’s furniture, clothing, tools and food were still of his family’s own creation.³

Even though class activities were “confounded” in the 18th century (by the accounts of Gray,¹ Marwick,² the Webbs,³ Ashton⁴ and Smith himself⁵) it is noteworthy that Smith defined class structure with considerable clarity. Individuals he divided into three classes; those who derived their living from capital, land, or labour.

If this class division now seems obvious Ronald L. Meek’s article “Adam Smith and the Classical Concept of Profit” helps to remind us that it was not obvious then. Indeed Meek goes so far as to claim that:

Adam Smith seems to have been, if not the first to discern the existence of this pattern in the society around him, at least the first to appreciate its enormous significance.¹

Smith was the first to establish profit on capital as a general category of class income which accrued to all who used “stock” in the employment of “productive” wage-labour² and which was qualitatively distinct both from the rent of land and from the wages of labour.³ As Meek points out,

Smith’s division of society into landlords, labourers and capitalists would appear to presuppose quite a considerable infiltration of capital and capitalist methods of organisation into agriculture and manufacture, yet if we look at Britain, and still more if we look at Scotland, at the time when Smith’s basic ideas were formed, we are forced to the conclusion that this process of infiltration had not then proceeded far enough to render Smith’s basic pattern plausible ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Dedication
• Table of Contents
• I Introduction
• II Property During Adam Smith’s Lifetime: A Brief Survey
• III The Influence of John Locke on Adam Smith’s Theory of Property
• IV Property in Adam Smith’s System of Moral Philosophy
• V Origin of Property: Conjecture or History
• VI Alienation of Property: The Market
• VII Alienation of Property: The Effect of Individuals
• VIII Existing Government: Theory and Practice
• IX Future Property Relations: Prescriptions and Projections
• X The Objectives of Government
• XI Conclusion
• Appendices
• Bibliography