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OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND STOCK
Vocabulary for this chapter
Artificer - a skillful or artistic worker; craftsperson.
Caprice - a sudden, unpredictable change, as of one's mind or the weather.
Collier - a coal miner.
Corporation - Obsolete A guild.
Diminution - the act, fact, or process of diminishing; lessening; reduction.
Extricate - to free or release from entanglement; disengage: to extricate someone from a dangerous situation.
Odious - highly offensive; repugnant; disgusting.
Occasion - Obsolete necessary business matter, and to meet a need.
Pecuniary - of or pertaining to money: pecuniary difficulties.
Repose - dignified calmness, as of manner; composure.
Part II Inequalities occasioned by the Policy of Europe.
Smith now goes on to state that the contents of Part I do not match up perfectly with Europe, as it's rules do not allow for perfect liberty. He states that there are three things that inhibit this. (1) restricting numbers in some employments, (2) artificially increasing numbers in others, and (3) by restricting "circulation" of labor and stock.
On the first point, where the employment is restricted to increase the wages of the workers, Smith blames the guilds (or as they are called in the 1700's, corporations). Guilds require people to reach a certain standard to become "free" to practice their trade, and this includes apprenticeships. The apprenticeships themselves are restricted in the number of apprentices that any master can have, and the length of time each man is required to serve as an apprentice. Most guilds allow only one or two apprentices per master, and in England 7 years is the usual time requirement for an apprentice. Smith consequently argues that universities took this model and decided that it should also take 7 years of "apprenticing" to become a "master" of the arts. i.e. receive your masters degree.
In the 5th year of Queen Elizabeth, there was enacted the Statute of Apprenticeship which said that nobody could practice any trade without first having studied under a master. This however included only towns that were large enough to support all the necessary trades, so in the country a blacksmith was allowed to make a wagon wheel if he needed to. It also affected only those trades that were around in the 1500's. So in a large town, if a carriage maker wanted to make a carriage, he needed to hire a trained wheel maker to make the wheel. But the wheel maker could make the whole carriage by himself if he wanted to since carriage making was not a trade back then. In France, it only takes 5 years as an apprentice to practice a trade, and in Scotland there is no regulation, and the guilds usually specify 3 years on average.
Smith argues then that these laws are horribly oppressive, and that each man should be able to use his "strength and dexterity in what manner he thinks proper." And that the judge for somebodies skill should be the people who hire him based on his work. He also argues that while a long apprenticeship generally leads to good skill in the craftsman, lack of skill is not the biggest concern of somebody hiring a craftsman, but fraud is, and honesty can not be trained by a master. He also states that a journeyman will eagerly work hard, because he makes money on each job, but an apprentice does not because he does not get paid, and this teaches bad habits to the apprentice. He even argues that the ancient Greeks and Romans had no concept of apprenticeship.
Smith then makes a case against long apprenticeships altogether, stating that most trades can be learnt in a couple days or weeks, and the apprentice would be more eager to learn if he was able to make a profit out of his work. The losers would be though the master who would now have to pay wages to the apprentice, and the apprentice himself who would eventually be in a career that pays less since it would be easier to gain skills in that particular craft. The winner though would be the public who would have much cheaper goods.
Smith concludes that corporations were only set-up to increase the price, and thus the wages and profits of those that were proficient in particular trades. He notes also that the only permission needed to setup a legal corporation was the consent of the town government, and in England, the permission of the king, which was always granted if there was a bribe. And since the local governments were all controlled by the artificers, they made sure that there were regulations in place to keep the supply low. Granted in the town they each had to pay more for each other's service, and that turned out to be a wash, but in their dealings with the country they made out greatly.
The next point he makes, is that the value of the towns imports must be exactly what its exports are. And using this he concludes that the industry of a town is more advantageous. He also notes that for every 100 people that get rich in towns due to industry, one gets rich in the country due to agrarian means.
Smith then goes on to say that in towns, people form "Combinations" or unions of sorts. They reach agreements where they do not train any apprentices and keep the supply of labor low so they can make great wages. But in the country the spirit of combinations and corporations has never taken root due to the low population density. And because they do not artificially restrict the labor, their wages do not rise to those in the towns. He finally concludes that farming is much more difficult then anything in the town, (which he says can be explained in a simple phamplet) while farming requires much more knowledge and experience. He talks about a ploughman, and how difficult it is working with different weather conditions, and oxes, versus a smith who works with the same materials every day, performing the same task. He argues that while a smith might be more articulate because he has more time to converse, the ploughman is smarter. He concludes this thought by stating that if there were no combinations or corporations, the wages in the country would be higher then in the towns as in China and India.
In staying with his comparisons with the town and country, he states that the town has the advantage of tariffs protecting their right to raise their prices to whatever they want with no fear of free competition. But this does have a limit. Eventually the stock in the towns becomes so great that competition increases, prices drop, and thus stock is forced out to the country due to the lower prices. This then increases the demand and thus wages for country labor.
Smith now begins to argue that the meeting of people of the same trade inherently will lead to higher prices due to combinations and corporations. He argues that it is not ethical to legally prevent them from meeting, but that the law should not assist them. He is opposed to traders registering their names and addresses as it becomes easy for people to assemble. He states that corporations only need a majority to enact a policy, but combinations need unanimous consent. He argues that corporations corrupt workmen, because they know that they are the only ones who are allowed to do a certain work, it does not matter if they do a bad job, they will always have customers.
On the second major point of this part, artificially increasing the numbers of workmen in other employments, enacts "an opposite kind" of advantage and disadvantage to certain employments. He starts off by talking about the clergy, and how they are almost always educated at the expense of scholarships. He argues that in practice a shoemaker makes twice as much as a curate, despite laws that require the curate's wages to be approximately that of the shoemaker. This Smith argues is because there are too many people who are drawn to become curate's. But this is a good thing for the church as it also gives them a larger pool in which to draw from. In addition the respect given to a clergyman makes up for some of the lost wages.
If free education were given to lawyers and doctors, their wages would sink as well, but there would be not as much respect to make up for the lost wages, and the whole profession would become degraded. Smith argues that this is what happened to "men of letters" or scholars. They have been educated for free, and the whole profession has fallen apart, and they barely make enough to get by. He says that now though, with the printing press, men of letters can at least get by, and before they were essentially beggars. In ancient Greek argues Smith, men were not educated at public expense, and teachers were able to become rich. Concluding this though, Smith states that cheap education is not a bad thing from the public perspective.
The third major point is that the obstruction of free trade can cause advantages and disadvantages. Smith argues that corporations restrict the ability of people to move from place to place even when they retain the same employment. He notes that the corporation laws restrict, for example linen weavers from moving to a silk weaving plant, even within the same town, despite the fact that the two tasks are almost identical. This does not allow then for the natural balancing of wages if demand for silk goes down and demand for linen goes up. He goes on to make the point that if the movement of labor is restricted, that in turn restricts the movement of stock, as there would be no point in moving stock if there was no labor to work on it.
Smith begins to talk about how the poor laws of England dually affect the workers inability to move from location to location, and gives a history of that law. At first it was enacted by Elizabeth that the parishes take care of their own poor, with funds coming from the churches. But the churches did not want to pay, and they convinced their poor to move to other parishes, where they needed to be settled for 40 days before they had legal rights. This prompted James II to require people to submit notice in writing, which was made public, that somebody intended to move. This made movement nearly impossible for the poor.
There were now only 4 ways to move. First by being taxed and paying the taxes of the parish. Second, by serving on a parish office for a year. Third, by serving in an apprenticeship in the parish. And fourth, by being hired into service for a year. The first two are impossible for the poor to obtain, as they can't pay taxes, and the parish won't elect him to office since he will then suck up the charity money. And married men find the last two nearly impossible since apprentices are almost never married, and there was a law forbidding married men form the fourth option. These 4 ways also prohibit any independent workmen and artificers from moving as well as they will not be hired as a servant or serve as an apprentice, and thus the free movement of labor is restricted.
It was then developed that certificates would be given to individuals who intended to move, which stated that even if they lived there for 40 days, they were not legal residents. This allowed them to work in that parish, make money to be able to support themselves and pay the taxes to allow them to become legal residents. But parishes were seldom willing to grand certificates to those that wanted to leave, because they would loose a man who could become productive, while they still support him in his new parish.
Smith states that these poor laws are the cause of the unequal distribution of wages across England, and that the man-made barriers of the parishes are more obstructive then even the natural barriers of sea and mountains. Smith regards the poor laws as a direct blow against liberty, yet there is not much public outcry to have these laws rescinded.
He concludes this chapter by noting that in ancient times, wages were well regulated, and even in London the wages of tailors is regulated. Profits too were at one point regulated, especially in the case of necessities such as bread. And therefore the inequalities of wages and of profits are affected by how the society progresses.
Chapter X Part I<---- ---->Chapter XI