An Epitome
Book I, Chapter 1. Of the Division
of Labor: THE greatest improvement in the productive powers of
labor, and the greater part of the skill, dexterity, and judgment with
which it is anywhere directed, or applied, seem to have been the
effects of the division of labor....To take an example, therefore, the
trade of the pin-maker; a workman not educated to this business, nor
acquainted with the use of the machinery employed in it, could scarce,
perhaps, with his utmost industry, make one pin in a day, and
certainly could not make twenty. But in the way in which this business
is now carried on, not only the whole work is a peculiar trade, but it
is divided into a number of branches, of which the greater part are
likewise peculiar trades. One man draws out the wire, another
straights it, a third cuts it, a fourth points it, a fifth grinds it
at the top for receiving, the head; to make the head requires two or
three distinct operations; to put it on is a peculiar business, to
whiten the pins is another; it is even a trade by itself to put them
into the paper; and the important business of making a pin is, in this
manner, divided into about eighteen distinct operations, which, in
some factories, are all performed by distinct hands, though in others
the same man will sometimes perform two or three of them.
I have seen a small manufactory of this kind where ten men only
were employed, and where some of them consequently performed two or
three distinct operations. But though they were very poor, and
therefore but indifferently accommodated with the necessary machinery,
they could, when they exerted themselves, make among them about twelve
pounds of pins in a day. There are in a pound upwards of four thousand
pins of a middling size. Those ten persons, therefore, could make
among them upwards of forty-eight thousand pins in a day. Each person,
therefore, making a tenth part of forty-eight thousand pins, might be
considered as making four thousand eight hundred pins in a day. But if
they had all wrought separately and independently, and without any of
them having been educated to this peculiar business, they certainly
could not each of them have made twenty, perhaps not one pin in a day;
that is, certainly, not the two hundred and fortieth, perhaps not the
four thousand eight hundredth part of what they are at present capable
of performing, in consequence of a proper division and combination of
their different operations....
The division of labor, so far as it can be introduced, occasions,
in every art, a proportionable increase of the productive powers of
labor. The separation of different trades and employments from one
another seems to have taken place in consequence of this advantage.
This separation, too, is generally called furthest in those countries
which enjoy the highest degree of industry and improvement; what is
the work of one man in a rude state of society being generally that of
several in an improved one.....This great increase of the quantity of
work which, in consequence of the division of labor, the same number
of people are capable of performing, is owing to three different
circumstances; first, to the increase of dexterity in every
particular workman; secondly, to the saving of the time which
is commonly lost in passing from one species of work to another; and
lastly, to the invention of a great number of machines which
facilitate and abridge labor, and enable one man to do the work of
many....
It is the great multiplication of the productions of all the
different arts, in consequence of the division of labor, which
occasions, in a well-governed society, that universal opulence
which extends itself to the lowest ranks of the people. Every workman
has a great quantity of his own work to dispose of beyond what he
himself has occasion for; and every other workman being exactly in the
same situation, he is enabled to exchange a great quantity of his own
goods for a great quantity, or, what comes to the same thing, for the
price of a great quantity of theirs. He supplies them abundantly with
what they have occasion for, and they accommodate him as amply with
what he has occasion for, and a general plenty diffuses itself through
all the different ranks of the society....
Book I, Chapter 2. Of the Principle which gives occasion
to the Division of Labor: THIS division of labor, from which so
many advantages are derived, is not originally the effect of any human
wisdom, which foresees and intends that universal opulence to which it
gives occasion. It is the necessary, though very slow and gradual
consequence of a certain propensity in human nature which has in view
no such extensive utility; the propensity to truck, barter, and
exchange one thing for another..... Man has almost constant occasion
for the help of his brethren, and it is in vain for him to expect it
from their benevolence only. He will be more likely to prevail if he
can interest their self-love in his favor, and show them that it is
for their own advantage to do for him what he requires of them.
Whoever offers to another a bargain of any kind, proposes to do this.
Give me that which I want, and you shall have this which you want, is
the meaning of every such offer; and it is in this manner that we
obtain from one another the far greater art of those good offices
which we stand in need of. It is not from the benevolence of the
butcher, the brewer, or the baker that we expect our dinner, but
from their regard to their own interest.
As it is by treaty, by barter, and by purchase that we obtain from
one another the greater part of those mutual good offices which we
stand in need of, so it is this same trucking disposition which
originally gives occasion to the division of labor. In a tribe of
hunters or shepherds a particular person makes bows and arrows, for
example, with more readiness and dexterity than any other. He
frequently exchanges them for cattle or for venison with his
companions; and he finds at last that he can in this manner get more
cattle and venison than if he himself went to the field to catch them.
From a regard to his own interest, therefore, the making of bows and
arrows grows to be his chief business, and he becomes a sort of
armorer, etc......
Book I, Chapter 4. Of the Origin and Use of Money:
WHEN the division of labor has been once thoroughly established, it is
but a very small part of a man's wants which the produce of his own
labor can supply. He supplies the far greater part of them by
exchanging that surplus part of the produce of his own labor, which is
over and above his own consumption, for such parts of the produce of
other men's labor as he has occasion for. Every man thus lives by
exchanging, or becomes in some measure a merchant, and the society
itself grows to be what is properly a commercial society.
But when the division of labor first began to take place, this
power of exchanging must frequently have been very much clogged and
embarrassed in its operations. One man, we shall suppose, has more of
a certain commodity than he himself has occasion for, while another
has less. The former consequently would be glad to dispose of, and the
latter to purchase, a part of this superfluity. But if this latter
should chance to have nothing that the former stands in need of, no
exchange can be made between them. The butcher has more meat in his
shop than he himself can consume, and the brewer and the baker would
each of them be willing to purchase a part of it. But they have
nothing to offer in exchange, except the different productions of
their respective trades, and the butcher is already provided with all
the bread and beer which he has immediate occasion for. No exchange
can, in this case, be made between them. In order to avoid the
inconvenience of such situations, every prudent man in every period of
society, after the first establishment of the division of labor, must
naturally have endeavored to manage his affairs in such a manner as to
have at all times by him, besides the peculiar produce of his own
industry, a certain quantity of some one commodity or other, such as
he imagined few people would be likely to refuse in exchange for their
produce....It is in this manner that money has become in all civilized
nations the universal instrument of commerce, by the intervention of
which goods of all kinds are bought and sold, or exchanged for one
another....
Book I, Chapter 5. Of the Real and Nominal Price of
Commodities, or their Price in Labor, and their Price in Money:
EVERY man is rich or poor according to the degree in which he can
afford to enjoy the necessaries, conveniences, and amusements of human
life. But after the division of labor has once thoroughly taken place,
it is but a very small part of these with which a man's own labor can
supply him. The far greater part of them he must derive from the labor
of other people, and he must be rich or poor according to the quantity
of that labor which he can command, or which he can afford to
purchase. The value of any commodity, therefore, to the person who
possesses it, and who means not to use or consume it himself, but to
exchange it for other commodities, is equal to the quantity of labor
which it enables him to purchase or command. Labor, therefore, is the
real measure of the exchangeable value of all commodities....
The real price of everything, what everything really costs to the
man who wants to acquire it, is the toil and trouble of acquiring it.
What everything 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 labor as much as what we acquire by the toil of our own
body. That money or those goods indeed save us this toil.....
Book I, Chapter 6. Of the Component Parts of the Price of
Commodities: IN that early and rude state of society which
precedes both the accumulation of stock and the appropriation of land,
the proportion between the quantities of labor necessary for acquiring
different objects seems to be the only circumstance which can afford
any rule for exchanging them for one another. If among a nation of
hunters, for example, it usually costs twice the labor to kill a
beaver which it does to kill a deer, one beaver should naturally
exchange for or be worth two deer. It is natural that what is usually
the produce of two days' or two hours' labor, should be worth double
of what is usually the produce of one day's or one hour's labor. If
the one species of labor should be more severe than the other, some
allowance will naturally be made for this superior hardship; and the
produce of one hour's labor in the one way may frequently exchange for
that of two hours' labor in the other.....
As soon as stock has accumulated in the hands of particular
persons, some of them will naturally employ it in setting to work
industrious people, whom they will supply with materials and
subsistence, in order to make a profit by the sale of their work, or
by what their labor adds to the value of the materials. In exchanging
the complete manufacture either for money, for labor, or for other
goods, over and above what may be sufficient to pay the price of the
materials, and the wages of the workmen, something must be given for
the profits of the undertaker of the work who hazards his stock in
this adventure. The value which the workmen add to the materials,
therefore, resolves itself in this ease into two parts, of which the
one pays their wages, the other the profits of their employer upon the
whole stock of materials and wages which he advanced....
In this state of things, the whole produce of labor does not always
belong to the laborer. He must in most cases share it with the owner
of the stock which employs him. Neither is the quantity of labor
commonly employed in acquiring or producing any commodity, the only
circumstance which can regulate the quantity which it ought commonly
to purchase, command, or exchange for. An additional quantity, it is
evident, must be due for the profits of the stock which advanced the
wages and furnished the materials of that labor....The real value of
all the different component parts of price, it must be observed, is
measured by the quantity of labor which they can, each of them,
purchase or command. Labor measures the value not only of that part of
price which resolves itself into labor, but of that which resolves
itself into rent, and of that which resolves itself into profit. In
every society the price of every commodity finally resolves itself
into some one or other, or all of those three parts; and in every
improved society, all the three enter more or less, as component
parts, into the price of the far greater part of commodities.....
Book I, Chapter 7. Of the Natural and Market Price of
Commodities: THERE is in every society or neighborhood an
ordinary or average rate both of wages and profit in every
different employment of labor and stock. This rate is naturally
regulated, as I shall show hereafter, partly by the general
circumstances of the society, their riches or poverty, their
advancing, stationary, or declining condition; and partly by the
particular nature of each employment. There is likewise in every
society or neighborhood an ordinary or average rate of rent,
which is regulated too, as I shall show hereafter, partly by the
general circumstances of the society or neighborhood in which the land
is situated, and partly by the natural or improved fertility of the
land. These ordinary or average rates may be called the natural
rates of wages, profit, and rent, at the time and place in which
they commonly prevail. When the price of any commodity is neither more
nor less than what is sufficient to pay the rent of the land, the
wages of the labor, and the profits of the stock employed in raising,
preparing, and bringing it to market, according to their natural
rates, the commodity is then sold for what may be called its natural
price. Though the price, therefore, which leaves him this profit is
not always the lowest at which a dealer may sometimes sell his goods,
it is the lowest at which he is likely to sell them for any
considerable time; at least where there is perfect liberty, or where
he may change his trade as often as he pleases.
The actual price at which any commodity is commonly sold is
called its market price. It may either be above, or below, or
exactly the same with its natural price. The market price of every
particular commodity is regulated by the proportion between the
quantity which is actually brought to market, and the demand of those
who are willing to pay the natural price of the commodity, or the
whole value of the rent, labor, and profit, which must be paid in
order to bring it thither. When the quantity of any commodity which is
brought to market falls short of the effectual demand, all those who
are willing to pay the whole value of the rent, wages, and profit,
which must be paid in order to bring it thither, cannot be supplied
with the quantity which they want. Rather than want it altogether,
some of them will be willing to give more. A competition will
immediately begin among them, and the market price will rise more or
less above the natural price, according as either the greatness of the
deficiency, or the wealth and wanton luxury of the competitors, happen
to animate more or less the eagerness of the competition.
When the quantity brought to market exceeds the effectual demand,
it cannot be all sold to those who are willing to pay the whole value
of the rent, wages, and profit, which must be paid in order to bring
it thither. Some part must be sold to those who are willing to pay
less, and the low price which they give for it must reduce the price
of the whole. The market price will sink more or less below the
natural price, according as the greatness of the excess increases more
or less the competition of the sellers, or according as it happens to
be more or less important to them to get immediately rid of the
commodity. When the quantity brought to market is just sufficient to
supply the effectual demand, and no more, the market price naturally
comes to be either exactly, or as nearly as can be judged of, the same
with the natural price. The whole quantity upon hand can be disposed
of for this price, and cannot be disposed of for more. The competition
of the different dealers obliges them all to accept of this price, but
does not oblige them to accept of less.
Such fluctuations affect both the value and the rate either of
wages or of profit, according as the market happens to be either
overstocked or understocked with commodities or with labor; with work
done, or with work to be done. But though the market price of every
particular commodity is in this manner continually gravitating, if one
may say so, towards the natural price, yet sometimes particular
accidents, sometimes natural causes, and sometimes particular
regulations of police, may, in many commodities, keep up the market
price, for a long time together, a good deal above the natural price.
When by an increase in the effectual demand, the market price of
some particular commodity happens to rise a good deal above the
natural price, those who employ their stocks in supplying that market
are generally careful to conceal this change. If it was commonly
known, their great profit would tempt so many new rivals to employ
their stocks in the same way that, the effectual demand being fully
supplied, the market price would soon be reduced to the natural price,
and perhaps for some time even below it. If the market is at a great
distance from the residence of those who supply it, they may sometimes
be able to keep the secret for several years together, and may so long
enjoy their extraordinary profits without any new rivals. Secrets of
this kind, however, it must be acknowledged, can seldom be long kept;
and the extraordinary profit can last very little longer than they are
kept.
A monopoly granted either to an individual or to a trading
company has the same effect as a secret in trade or manufactures. The
monopolists, by keeping the market constantly understocked, by never
fully supplying the effectual demand, sell their commodities much
above the natural price, and raise their emoluments, whether they
consist in wages or profit, greatly above their natural rate. The
price of monopoly is upon every occasion the highest which can be got.
The natural price, or the price of free competition, on the contrary,
is the lowest which can be taken, not upon every occasion, indeed, but
for any considerable time together. The one is upon every occasion the
highest which can be squeezed out of the buyers, or which, it is
supposed, they will consent to give: the other is the lowest which the
sellers can commonly afford to take, and at the same time continue
their business.
The exclusive privileges of corporations, statutes of
apprenticeship, and all those laws which restrain, in particular
employments, the competition to a smaller number than might otherwise
go into them, have the same tendency, though in a less degree. They
are a sort of enlarged monopolies, and may frequently, for ages
together, and in whole classes of employments, keep up the market
price of particular commodities above the natural price, and maintain
both the wages of the labor and the profits of the stock employed
about them somewhat above their natural rate. Such enhancements of the
market price may last as long as the regulations of police which give
occasion to them....
Book I, Chapter 8. Of the Wages of Labor: THE produce
of labor constitutes the natural recompense or wages of labor. In that
original state of things, which precedes both the appropriation of
land and the accumulation of stock, the whole produce of labor belongs
to the laborer. He has neither landlord nor master to share with him.
Had this state continued, the wages of labor would have augmented with
all those improvements in its productive powers to which the division
of labor gives occasion. All things would gradually have become
cheaper. They would have been produced by a smaller quantity of labor;
and as the commodities produced by equal quantities of labor would
naturally in this state of things be exchanged for one another, they
would have been purchased likewise with the produce of a smaller
quantity. But this original state of things, in which the laborer
enjoyed the whole produce of his own labor, could not last beyond the
first introduction of the appropriation of land and the accumulation
of stock. It was at an end, therefore, long before the most
considerable improvements were made in the productive powers of labor,
and it would be to no purpose to trace further what might have been
its effects upon the recompense or wages of labor. As soon as land
becomes private property, the landlord demands a share of almost all
the produce which the laborer can either raise, or collect from it.
His rent makes the first deduction from the produce of the labor which
is employed upon land.
Masters are always and everywhere in a sort of tacit, but constant
and uniform combination, not to raise the wages of labor above their
actual rate. To violate this combination is everywhere a most
unpopular action, and a sort of reproach to a master among his
neighbors and equals. Masters, too, sometimes enter into particular
combinations to sink the wages of labor even below this rate. These
are always conducted with the utmost silence and secrecy, till the
moment of execution, and when the workmen yield, as they sometimes do,
without resistance, though severely felt by them, they are never heard
of by other people. Such combinations, however, are frequently
resisted by a contrary defensive combination of the workmen; who
sometimes too, without any provocation of this kind, combine of their
own accord to raise the price of their labor.....A man must always
live by his work, and his wages must at least be sufficient to
maintain him. They must even upon most occasions be somewhat more;
otherwise it would be impossible for him to bring up a family, and the
race of such workmen could not last beyond the first generation....
When the landlord, annuitant, or monied man, has a greater revenue
than what he judges sufficient to maintain his own family, he employs
either the whole or a part of the surplus in maintaining one or more
menial servants. Increase this surplus, and he will naturally increase
the number of those servants. When an independent workman, such as a
weaver or shoemaker, has got more stock than what is sufficient to
purchase the materials of his own work, and to maintain himself till
he can dispose of it, he naturally employs one or more journeymen with
the surplus, in order to make a profit by their work. Increase this
surplus, and he will naturally increase the number of his journeymen.
The demand for those who live by wages, therefore, necessarily
increases with the increase of the revenue and stock of every country,
and cannot possibly increase without it. The increase of revenue and
stock is the increase of national wealth....
Is this improvement in the circumstances of the lower ranks of the
people to be regarded as an advantage or as an inconvenience to the
society? The answer seems at first sight abundantly plain. Servants,
laborers, and workmen of different kinds, make up the far greater part
of every great political society. But what improves the circumstances
of the greater part can never be regarded as an inconvenience to the
whole. No society can surely be flourishing and happy, of which the
far greater part of the members are poor and miserable. It is but
equity, besides, that they who feed, clothe, and lodge the whole body
of the people, should have such a share of the produce of their own
labor as to be themselves tolerably well fed, clothed, and lodged.
The liberal reward of labor, as it encourages the propagation, so
it increases the industry of the common people. The wages of labor are
the encouragement of industry, which, like every other human quality,
improves in proportion to the encouragement it receives. A plentiful
subsistence increases the bodily strength of the laborer, and the
comfortable hope of bettering his condition, and of ending his days
perhaps in ease and plenty, animates him to exert that strength to the
utmost. Where wages are high, accordingly, we shall always find the
workmen more active, diligent, and expeditious than where they are
low.
Book I, Chapter 10. Of Wages and Profit in the different
Employments of Labor and Stock: THE policy of Europe, by not
leaving things at perfect liberty, occasions other inequalities of
much greater importance. It does this chiefly in the three following
ways. First, by restraining the competition in some employments
to a smaller number than would otherwise be disposed to enter into
them; Second, by increasing it in others beyond what it
naturally would be; and, Third, by obstructing the free
circulation of labor and stock, both from employment to employment and
from place to place.
First, the policy of Europe occasions a very important
inequality in the whole of the advantages and disadvantages of the
different employments of labor and stock, by restraining the
competition in some employments to a smaller number than might
otherwise be disposed to enter into them. The exclusive privileges of
corporations, or guilds, are the principal means it makes use of for
this purpose. The property which every man has in his own labor, as it
is the original foundation of all other property, so it is the most
sacred and inviolable. The patrimony of a poor man lies in the
strength and dexterity of his hands; and to hinder him from employing
this strength and dexterity of his hands; and to hinder him from
employing this strength and dexterity in what manner he thinks proper
without injury to his neighbor is a plain violation of this most
sacred property. It is a manifest encroachment upon the just liberty
both of the workman and of those who might be disposed to employ him.
As it hinders the one from working at what he thinks proper, so it
hinders the others from employing whom they think proper....The
pretense that corporations are necessary for the better government of
the trade is without any foundation. The real and effectual discipline
which is exercised over a workman is not that of his corporation, but
that of his customers. It is the fear of losing their employment which
restrains his frauds and corrects his negligence. An exclusive
corporation necessarily weakens the force of this discipline.
Second, the policy of Europe, by increasing the competition
in some employments beyond what it naturally would be, occasions
another inequality of an opposite kind in the whole of the advantages
and disadvantages of the different employments of labor and
stock....In the professions, such as law and medicine, if an equal
proportion of people were educated at the public expense, the
competition would soon be so great as to sink very much their
pecuniary reward. It might then not be worth any man's while to
educate his son to either of those professions at his own expense....
Third, the policy of Europe, by obstructing the free
circulation of labor and stock both from employment to employment, and
from place to place, occasions in some cases a very inconvenient
inequality in the whole of the advantages and disadvantages of their
different employments....Whatever obstructs the free circulation of
labor from one employment to another obstructs that of stock likewise;
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. Corporation laws, however, give less obstruction to the free
circulation of stock from one place to another than to that of labor.
It is everywhere much easier for a wealthy merchant to obtain the
privilege of trading in a town corporate, than for a poor artificer to
obtain that of working in it....
Book I, Chapter 11. Effects of the Progress of
Improvement upon the Real Price of Manufactures: It is the
natural effect of improvement, however, to diminish gradually the real
price of almost all manufactures. That of the manufacturing
workmanship diminishes, perhaps, in all of them without exception. In
consequence of better machinery, of greater dexterity, and of a more
proper division and distribution of work, all of which are the natural
effects of improvement, a much smaller quantity of labor becomes
requisite for executing any particular piece of work, and though, in
consequence of the flourishing circumstances of the society, the real
price of labor should rise very considerably, yet the great diminution
of the quantity will generally much more than compensate the greatest
rise which can happen in the price....But in all cases in which the
real price of the rude materials either does not rise at all, or does
not rise very much, that of the manufactured commodity sinks very
considerably.
Every improvement in the circumstances of the society tends either
directly or indirectly to raise the real rent of land, to increase the
real wealth of the landlord, his power of purchasing the labor, or the
produce of the labor of other people. The extension of improvement and
cultivation tends to raise it directly. The landlord's share of the
produce necessarily increases with the increase of the produce.....
Every increase in the real wealth of the society, every increase in
the quantity of useful labor employed within it, tends indirectly to
raise the real rent of land. A certain proportion of this labor
naturally goes to the land. A greater number of men and cattle are
employed in its cultivation, the produce increases with the increase
of the stock which is thus employed in raising it, and the rent
increases with the produce.
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