Michael Perelman: Why Adam Smith Advocated Controls Over Workers

Yves here. In this post, Michael Perelman continues his discussion of Adam Smith’s The Wealth of Nations. Here, he focuses on the contradiction between Smith’s laissez faire attitude towards commerce and the need he saw for extensive control of the behavior of workers.

By Michael Perelman, a professor of economics at California State University, Chico

Military Discipline, Market Discipline

Smith addressed two kinds of controls to maintain social and economic order – controls over the market and controls over the workers. Smith’s call for market controls are minimal compared to those that control people. This imbalance should not be surprising considering Smith’s interest in molding the human personality to fit the needs of a market society.

Smith’s suggested controls of personal behavior are vastly more far reaching than one might expect after reading the first part of The Wealth of Nations, where volunteerism promises a world of harmonious prosperity. People’s response to the grain trade suggested that markets were not changing personal behavior the way Smith preferred.

Molding personal behavior to fit the needs of the market was not the only thing Smith had in mind. It was also crucial in terms of national defense, which Smith considered more important than opulence (Smith 1789, IV.ii.30: pp. 464 65). In fact, on at least two occasions, Smith equated opulence with effeminacy _ looking back favorably at a time of “rough, manly people who had no sort of domestic luxury or effeminacy” (Smith 1762 1766, p. 189; see also p. 202).

Like Ferguson, Smith was disturbed that the growing commercial society that he welcomed was inhospitable to military virtue. The personal qualities that make for a strong military are different from those that are appropriate for a successful commercial society. To his credit, Smith sensed that working conditions were also part of the equation. Here, Smith returned to the subject of division of labor, but his tone sounded more like Ferguson than himself, warning that “some attention of government is necessary in order to prevent the almost entire corruption and degeneracy of the great body of the people” (Smith 1789, V.i.f.49, p. 781]

Smith did not mean that the government should change the way business treats its workers, but rather it had the responsibility to find a way to maintain the workers’ manly vigor necessary for military service:

The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become? The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country, he is altogether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance, in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expence of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it. [Smith 1789, V.i.f.50, p. 781 82]

This passage is often cited as evidence of Smith’s humanitarian concerns, but the context of this critique of the division of labor throws a different light on the subject. Commercial society and national defense seemed to be at odds. According to Smith’s four stages theory, however, the market should have been turning everybody into merchants. Certainly, the merchant class had many qualities that Smith considered desirable:

Regularity, order, and prompt obedience to command are qualities which, in modern armies, are of more importance towards determining the fate of battles than the dexterity and skill of the soldiers in the use of their arms. [Smith 1789, V.i.a.21, p. 699]

To the extent that the market succeeded in that respect, national defense was sure to suffer. Even moderately successful people would consider their time too valuable to voluntarily devote themselves to soldiering. In Smith’s words:

Into other arts the division of labour is naturally introduced by the prudence of individuals, who find that they promote their private interest better by confining themselves to a particular trade than by exercising a great number. But it is the wisdom of the state only which can render the trade of a soldier a particular trade separate and distinct from all others. A private citizen who, in time of profound peace, and without any particular encouragement from the public, should spend the greater part of his time in military exercises, might, no doubt, both improve himself very much in them, and amuse himself very well; but he certainly would not promote his own interest. [Smith 1789, V.i.a.14, p. 697]

How can “the wisdom of the state” create a military if it is not in the self interest of people to participate? Smith understood that the work demands of modern industry also required discipline, but not the healthy self discipline that Smith admired. Workers who had to submit to the harsh tedium of adapting to the unremitting rhythms of machines experienced an unnatural form of discipline – one that broke the spirit of some and made others angry and rebellious, such as when they practiced the values of the moral economy. Neither outcome was particularly favorable to the production of desirable cannon fodder. So, for Smith, almost nobody in the cities seemed suitable to provide for national defense.

The poor might seem to be likely candidates for military service, but the demands of modern industry left people with little free time (Smith 1789, V.i.f.53, pp. 784 85; and V.i.a.15, p. 697). The poor masses also presented an intellectual problem for Smith, who associated the degraded condition of the workers with cowardice. At the same time, Smith was fearful that these cowards might eventually rise up and threaten the wealth of the wealthy.

To remedy this situation, Smith called upon the state to transform the people, correcting their personal defects and making them into upstanding citizens. To his credit, Smith did called for educating the poor, while others at the time feared that widespread literacy could make them more dangerous. However, Smith, the reputed libertarian, suggested that education be mixed with compulsion:

The public can impose upon almost the whole body of the people the necessity of acquiring those most essential parts of education, by obliging every man to undergo an examination or probation in them before he can obtain the freedom in any corporation, or be allowed to set up any trade either in a village or town corporate. [Smith 1789, V.i.f.57, p. 786]

Coercion would force the poor to submit to education. The penalty would be that potential merchant workers would be limited in the kind of merchandise (their work) that non compliant people could bring to the market.

Smith was not advocating the instructing students in the same classical literature that wealthy children studied. Instead, he advocated the creation of a martial spirit that he associated with these ancient imperial states of Greece and Rome:

It was in this manner, by facilitating the acquisition of their military and gymnastic exercises, by encouraging it, and even by imposing upon the whole body of the people the necessity of learning those exercises, that the Greek and Roman republics maintained the martial spirit of their respective citizens. [Smith 1789, V.i.f.58, p. 786]

In the end, Smith’s educational proposal was not intended so much to promote working people’s welfare as to improve their martial spirit. This education was designed, at least in part, to improve the capacity for human annihilation rather than human flourishing.

Smith’s defenders note that in his discussion of education two paragraphs earlier, he discussed how familiarity with geometry and mechanics would make workers more productive, though that single mention of productivity weighs lightly compared to six references to “martial spirit.”

Smith was also an avid promoter of the militia. He was a founding member of the Poker Club, the purpose of which was to further the cause of a militia rather than a standing army. By the time The Wealth of Nations appeared, Smith advocated a standing army at least “one in which citizens maintain the manly virtues, a community that praises courage, a country which sympathizes with the cardinal virtue of courage” (Montes 2008; see also Sher 1989).

The Militia Act had authorized raising a militia beginning in May 1757. The legislation also allowed for training on Sundays, but made no provision for paying the members. In August, a small group of village militiamen demanded a barrel of ale from an aged clergyman. Later, they demonstrated, asking for money. According to an article in Scots Magazine, participants said they would willingly sacrifice their lives for King and country but “would not be obliged to quit home for sixpence a day to serve in the militia” (Mossner and Ross 1977, n p. 22).

Although one might commend these reluctant militiamen for their merchant like calculation, Smith’s reaction was harsh. He wrote to a friend, “The Lincolnshire mobs provoke our severest indignation for opposing the militia, and we hope to hear that the ringleaders are all to be hanged” (Smith 1757, pp. 21 22).

Smith’s military concerns reveal him as a strict disciplinarian, very much at odds with his image as a philosopher of freedom. His admirers tend to pay too much attention to the volunteerism of the first part of his book. This darker side of Smith’s vision of socialization deserves more attention.

Religious Discipline

One might argue in Smith’s defense that the military requires a high level of discipline. However, even in matters as personal as religion, Smith severely limited the amount of voluntarism he would tolerate. He worried about “the poison of enthusiasm and superstition; and where all the superior ranks of people were secured from it, the inferior ranks could not be much exposed to it.” He called upon the state to “correct whatever was unsocial or disagreeably vigorous in the morals of all the little sects.” In particular, “before (anyone) was permitted to exercise any liberal profession or before he could be received as a candidate for any honourable office or trust or profit,” he should have to earn a license by proving his worthiness to the state (Smith 1789, V.i.g.14, p. 796). Smith also opposed a provision that would have allowed members of the Scottish Presbyterian church to choose their own clergyman for fear that the process might unleash dangerous emotions (see Anderson 1988; Leathers and Raines 1992; 2002 for more detail on Smith and religious discipline).

In contrast, doctors, whose incompetence threatened only human health rather than public order, had no need for state supervision. Smith even questioned restrictions on the sale of medical degrees (Smith 1774).

Although Smith managed to exorcise all considerations of class from his theoretical representation of the world, in practical matters, these examples show that class discipline remained a matter of utmost importance. For Smith, individual virtue rather than social influences determine people’s fate. In a particularly striking passage, Smith suggested:

If we consider the general rules by which external prosperity and adversity are commonly distributed in this life, we shall find [that] every virtue naturally meets with its proper reward, with the recompense which is most fit to encourage and promote it …. What is the reward most proper for encouraging industry, prudence, and circumspection? Success in every business. And is it possible that in the whole of life these virtues should fail of attaining it? [Smith 1759a, 3.5.8, p. 166]

The truth was (and still is) that members of the lower class had little chance of succeeding in business, even with a high degree of virtue. Today, in California, you can see farm workers sweating in the fields under the 100 degree sun. Nobody can doubt that what these people are doing is difficult, but despite their hard work, their chance of material success is slight.

Yet, Smith seemed bewildered about why many poor people would express their discontent. The real surprise should be that such people accept their lot in life while others wallow in obscene luxury.

Class Warfare

How could Smith write so glowingly about a classless economy in the Wealth of Nations, then turn around and explain how to conduct class warfare? The key to disentangling Smith’s contradiction is that he designed his book for two different – and even contradictory – purposes.

The first part of the book celebrated the growth of the market economy. In that cleverly designed work of ideology, Smith cast the development of the market in as favorable a light as possible. Here, facts and details were not much needed, except to make an ideological point. Discussion of the Carron Works would have been a diversion. In contrast, charming anecdotes, such as his portrayal of the pin factory, offered evidence to support his ideology, while making the discussion a joy to read.

In the second part, Smith was developing a handbook of practical administration. Here too, Smith had his stories, but he necessarily had to deal with real facts even unpleasant facts. As a result, these two parts are often inconsistent, as was the case with his negative characterization of the division of labor in discussing the military.

The first part of the book emphasizes voluntarism. Then, suddenly, in the latter part of the book, the state, which heretofore was the enemy of all economic progress, becomes essential for keeping workers in line. Now the state rather than the market must administer the Procrustean bed. Students of Adam Smith’s work rarely address his call for government intervention, with notable exceptions, such as Jacob Viner (1927, p. 229). Instead, they emphasize the first part of the book, where the proper role of government was mostly limited to education and national defense.

Smith’s advocacy of harsh discipline reflected an important element of his social thinking. A lack of discipline not only cut into potential profits, but threatened insecurity as well. Smith was living in a time in which the English ruling class had reason to feel insecure.

England faced three threats at the time – regional insurrections, foreign wars, and class war. The danger of regional insurrections seemed to be rapidly diminishing at the time because England had recently squashed the last serious rebellion in Scotland. Smith thought that the union with England would integrate their economies, bringing both peace and prosperity to Scotland. More important, Smith saw the traditional Scottish aristocracy dissipating its wealth and power through ostentatious consumption. Smith mocked that foolish behavior of the aristocracy:

All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons. For a pair of diamond buckles, perhaps, or for something as frivolous and useless, they exchanged the maintenance, or what is the same thing, the price of the maintenance of a thousand men for a year, and with it the whole weight and authority which it could give them …. and thus, for the gratification of the most childish, the meanest, and the most sordid of all vanities, they gradually bartered their whole power and authority. [Smith 1789, III.iv.10, p. 419]

England was also in the midst of a long series of difficult wars, but more worrisome, England appeared to be on the verge of revolutionary insurrection on the part of workers (see Thompson 1963). For Smith:

In free countries, where the safety of government depends very much upon the favourable judgment which the people may form of its conduct, it must surely be of the highest importance that they should not be disposed to judge rashly or capriciously concerning it. [Smith 1789, V.i.f g.61, p. 788]

Unfortunately for Smith, this “favourable judgment” among the poor did not seem to be very common. Perhaps, it is fitting that the house in which Smith spent his last years eventually became a municipal center for troubled boys (Anon. 2008).

Labor in Smith’s World

Adam Smith was full of contradictions. Despite his individualist philosophy, workers’ individual qualities, other than a willingness to keep their noses to the grindstone, had no interest for him. Ordinary people just had to earn their income by the sweat of their brow, according to the biblical injunction (Genesis 3: 19). Any role for creativity is out of the question. As Ferguson wrote, far more accurately than Smith:

Many mechanical arts, indeed, require no capacity; they succeed best under a total suppression of sentiment and reason; and ignorance is the mother of industry as well as of superstition. Reflection and fancy are subject to err; but a habit of moving the hand, or the foot, is independent of either. Manufacturers, accordingly, prosper, where the mind is least consulted, and where the workshop may, without any great effort of imagination, be considered as an engine, the parts of which are men. [Ferguson 1793, pp. 182 83]

Members of the working classes were limited to two options. Either they would obediently perform almost animalistic tasks in the workplace or they would become dissolute beings who submerged themselves in unruly mobs that threatened privileged members of society.

Despite Smith’s denigration of workers, he knew that production still depends upon the ability to mobilize labor. Therefore, he occasionally continued in the long mercantilist tradition that attributed the value of production to labor. For example, we read in The Wealth of Nations:

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every thing is really worth to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose upon other people. What is bought with money or with goods is purchased by labour. [Smith 1789, I.5.2, p. 47]

Smith’s labor theory of value treats workers as interchangeable parts. He went even further than modern economic theory, which regards work as nothing more than the loss of the potential utility of leisure. Smith presumed that the psychology of any worker was indistinguishable from the others. In his words:

Equal quantities of labour, at all times and places, may be said to be of equal value to the labourer; in his ordinary state of health, strength and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty, and his happiness. [Smith 1789, I.v.7, p. 50]

Given this perspective, no one should be surprised that Smith paid little attention to working conditions, with one exception: he alluded to working conditions by mentioning that without strict supervision workers might slack off. The workers he used to make his point in this case were not manual workers laboring under difficult conditions. Instead Smith turned to the lax performance of college professors – workers with whom Smith was acquainted.

It is in the interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same, whether he does or does not perform some very laborious duty, it is certainly his interest, at least as interest is vulgarly understood, either to neglect it altogether, or, if he is subject to some authority which will not suffer him to do this, to perform it in as careless and slovenly a manner as that authority will permit. If he is naturally active and a lover of labour, it is his interest to employ that activity in any way from which he can derive some advantage, rather than in the performance of his duty, from which he can derive none. [Smith 1789, V.i.f.7, p. 760]

Neither Smith, nor most later economists, gave much consideration to exactly what the toil and trouble actually meant for the masses of workers who made life comfortable for people who had the leisure to reflect upon such matters.

As his book progressed, Smith shifted his approach, abandoning this idea of labor based value. Smith had good reason for this. He was attempting to put the relations between labor and capital in the best possible light. This objective explains why Smith would go to such lengths to obscure the role of technology and large scale production. Similarly, Smith avoided criticizing government policies to rig the labor market by holding down wages (Smith 1789, Book 1, Chapter 10, Part 2). Such regulations would give lie to Smith’s vision of the market where people met as equals.

In a commencement address given by Joan Robinson at the University of Maine three decades ago, she humorously suggested: “It is not from the benevolence of the butcher, the brewer, or the baker,” I think that when Adam Smith was telling the story of getting his dinner from the butcher, the brewer, and the baker he was really thinking of a gentleman who has money to spend. He was not thinking of the struggles of those tradesmen to make a living.”

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  1. Carolinian

    Smith’s attitude toward the lower orders sounds a lot like a certain Dickens character often encountered around Christmas time. Can’t imagine why the colonies wanted to get away from these folks.

    Not that our American aristocrats were necessarily charmers either. Just before the Civil War S.C.’s Wade Hampton was the country’s richest man. His “wealth” consisted of hundreds of slaves.

    1. digi_owl

      “Can’t imagine why the colonies wanted to get away from these folks.”

      With the massive irony that the US rich are pretty much carbon copies of the Dickens characters…

  2. Jacob

    “Smith’s labor theory of value treats workers as interchangeable parts.”

    Most people think Karl Marx originated the labor theory of value, but Marx got this idea from Smith and other earlier philosophers.

    1. digi_owl

      And it likely distracted Marx from seeing what his gathered data and dialectic was telling him.

  3. P FitzSimon

    As I recall, Smith tagged aristocrats as useless rent collectors, businessman or masters as greedy money grubbers and workmen as lazy, shiftless avoiders of work. The only class he admired were seekers of wisdom like himself.

    1. F. Beard

      The only class he admired were seekers of wisdom like himself.

      Then he obviously failed to acquire it, at least per Scripture.

  4. F. Beard

    Ordinary people just had to earn their income by the sweat of their brow, according to the biblical injunction (Genesis 3: 19)

    That injunction is for ALL, not just for “ordinary people”, nor is it a curse that we are forbidden to undo (by automation, for example) if we can, except by injustice.

    1. Jacob

      It is clear in Biblical scripture that there were different social classes in Biblical times, those who performed hard labor and those who did not. For example, in the Bible, there were slaves and slave owners, two distinctly different classes of people; one is a class of servile laborers, and the other class are the fortunate people who lived off the labor of their slaves. This passage is one of several in the New Testament that sets forth the domination/subordination relationship between slaves and their masters: “Slaves, obey your earthly masters with deep respect and fear. Serve them sincerely as you would serve Christ.” (Ephesians 6:5 NLT). In this passage, slaves are commanded through the authority of scripture to control their thoughts and behavior in regard to their attitudes toward work and their subservient relationship to their worldly masters. Adam Smith was a religious man, and I’m certain that many of his ideas derive from Biblical scripture.

      1. F. Beard

        The Biblical norm for Hebrews were family farms that could not be permanently lost. The worst a Hebrew should expect was to be a well-treated indentured servant for 6 years after which he was to be released well provisioned to continue life on his own. A permanent upper-lower class arrangement was thus not part of the design. Yes, foreign slaves were permitted but it was expected that they or their descendants would become Hebrews themselves and thus enjoy the same protections too eventually.

        As for the New Testament, slavery was not a desirable state (1 Corinthians 7:21) so no case that a permanent master-slave class arrangement is part of New Testament living can be made either.

        1. Lambert Strether

          Hmm. On slavery being a desirable state, the “positive good” theorists of the slave power that briefly became the Confederate States of America would disagree — and on Biblical grounds, too, if I recall my Genovese (“The Mind of the Master Class”).

          1. F. Beard

            Christians were or at least should have been immune to slavery by other Christians with 6 years of indentured servitude being the worst they might expect.

            Non-Christians might be enslaved by Christians in theory but if they converted then at least their children born afterword should be free-born since Christians were to be immune to enslavement by other Christians.

            The Southern idea of a permanent slave class was thus bogus. Slavery was to be a means of conversion per my understanding of Scripture.

  5. digi_owl

    ” looking back favorably at a time of “rough, manly people who had no sort of domestic luxury or effeminacy” (Smith 1762 1766, p. 189; see also p. 202).”

    Oh dear deity…


    The link is a blog entry by Adam Curtis, pointing to a very similar attitude among the British managers of Iraq after WW1. End result was that they sidelined the urban middle class of Baghdad and instead empowered the rural sheiks, believing them the equivalent of the British landed aristocracy of a bygone era…

  6. F. Beard

    it is certainly his interest, at least as interest is vulgarly understood, either to neglect it altogether, or, if he is subject to some authority which will not suffer him to do this, to perform it in as careless and slovenly a manner as that authority will permit. Adam Smith

    In all labor there is profit, but mere talk leads only to poverty. Proverbs 14:23 New American Standard Bible (NASB)

    Whatever your hand finds to do, do it with all your might; for there is no activity or planning or knowledge or wisdom in Sheol where you are going. Ecclesiastes 9:10

    He also who is slack in his work Is brother to him who destroys. Proverbs 18:9

    Whatever you do, do your work heartily, as for the Lord rather than for men,
    Colossians 3:23


    It thus appears that Adam Smith was a Biblical ignoramus.

    In my own work, I do it as well as I can FOR MY OWN BENEFIT.

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