SOCB42H3 Study Guide - Wage Labour, Productive And Unproductive Labour, Factor Price
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Wealth of Nations: Study Questions
Introduction (pp 1-5)
According to Smith, in what does the wealth of a nation consist? What other alternatives to his
answer are there?
The wealth of nations is its per capita national product – the amount that the average person actually
What conditions regulate how productive a nation is? Explain in your own words.
The productivity of a nation is regulated by:
The skill, efficacy and judgment by which productive labour is employed
The proportion of those who are employed in useful labour and those who are not employed in
Which is more important for generating productivity: skillful labor, or more laborers? Why? What
evidence does Smith provide?
What is Smith’s guiding question in this book as a whole? How do the sub-topics he proposes – the
division of labor, capital stock, the history of opulence, theories of political economy, and
revenues/debts of the sovereign – seek to address that agenda?
Smith’s guiding is: How does a nation as a whole become rich? (essentially about investigating the
causes of the wealth of nations)
Includes the question of what is the nature of wealth as well as how does one become rich.
Book I (pp 9-32):
Slowly read the title of Book I. What are the central topics of this book?
Title: Of the causes of improvements in the productive powers of labour and of the order according to
which its produce is naturally distributed among different ranks of people
This section centers on the Division of Labour and defines it, examines its forms, its relation to
productivity as well as its consequences. It also touches upon its limits.
Chapter 1: Of the division of Labour
What is the division of labour (DOL)? How does it increase the productivity of labour? Explain in
your own words Smith’s example of the pin factory.
The division of labour refers to the specialization in task and profession. To elaborate, this includes the
separation of employment and the separation of tasks. The separation of employment is dividing into
different types of employment i.e. teachers, doctors, lawyers while the separation of tasks is dividing a
job into various tasks. Take even the trifling manufacture of pin making, for example. Most of us would
be hard pressed to make even one pin in a day, even if the metal were already mined and smelted for
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us. We could certainly not make twenty. And yet ten people in a pin factory can make 48,000 pins a
day. That is because they each specialise in different parts of the operation. One draws out the wire,
another straightens it, a third cuts it, a fourth points it, a fifth grinds the top to receive the head.
Making and applying the head require further specialist operations; whitening the pins and packaging
them still more. Specialisation/ the division of labour has made the process thousands of times more
p. 12: Smith says that in some “arts and manufacture” the DOL cannot be instituted. Think of some
For instance in agriculture, or with spinner or welders for instance their tasks cannot be divided via the
division of labor.
The impossibility of entirely separating the various tasks applicable in agriculture is perhaps the reason
what the improvement of the productive powers of labor, in this art, does not always keep pace with
their improvement in manufactures.
p. 14: why, more specifically, does the DOL increase productivity? Smith cites three reasons. What
are they, how do they arise from the division of labour, and how do they increase productivity?
The DOL increases productivity for several reasons. First is the increased skill which people gain when
they do the same task over and over again. The rapidity with which skilled workers can do a task is
sometimes amazing. Second, less time is wasted in moving from one task to the next. A weaver who
cultivates a smallholding has to break off weaving, fetch the farming tools, and walk out to the field. It
takes time for people to get in the right frame of mind when they turn from one task to another, and
back again. The importance of such disruptions should not be underestimated. Third, specialization
allows the use of dedicated machinery, which dramatically cuts the time and effort needed in
manufactures. Often, workers themselves have invented labour saving devices, while other
improvements have come from the machine-makers, who are now a specialist set of trades
p. 16: how does the DOL lead to new technologies?
When workers must focus on working specifically on a specific object, they are much more likely to
discover easier and readier methods of constructing that object. Much of the innovations in machinery
stems from workers, who were part of a simple operation, turned their focus to easier and readier
methods of performing their work. On the other hand, the division of labour between jobs has also
helped in the sense that engineers can focus their attention on improving machines. To elaborate,
machine makers/industrial designer’s things of ways to make something that allows people to work
more efficiently. Similarly, workers attempt to discover ways to do work with less effort.
p. 18: how does the DOL apply in the case of science?
In regards to technological innovation, science focuses on thinking, coming up with new ideas in order
to help the industry
p. 19: Smith describes the vast number of different people and industries that go into dressing an
average worker. Look at what you are wearing, and try to make a list of where all your stuff comes
from and how it gets to you.
Only pages 1-3 are available for preview. Some parts have been intentionally blurred.
p. 22: What does it mean to say that the DOL does not arise from “the effect of any human wisdom”?
Explain in your own words what Smith means by the “propensity to truck, barter, and trade”?
The “effect of any human wisdom” refers to the type of wisdom that foresees and intends that general
opulence to which it gives occasion. In other words, the DOL was not devised through foresight or on
purpose but rather as a result of the propensity to truck, barter and trade. This Is essentially the
natural tendency for human beings to exchange with one another and is connected to humans capacity
to reason/talk to each other. There are many ways to get others to do what you want, but trade is
uniquely human; getting into perspective of another.
p. 23: Why is benevolence and friendship not enough to gain the assistance and co-operation we
need in commercial societies?
In a civilized society, people constantly need the help and assistance of multitudes of people. However,
no one has the time or resources to build a friendship with each person in order to secure their help
but rather transactions are based on self-interest, ways of getting things that don’t depend on personal
favor but base trade on each other’s self–interest.
p. 24: Why does nobody really choose to depend on the benevolence of fellow-citizens to satisfy
Because nobody but a beggar chooses to depend chiefly on the benevolence of fellow citizens to
satisfy their needs although when considered, even beggars must barter and trade for what they need.
For instance, trading the money they receive for food and clothing. In essence, in trade, we address
ourselves not to the humanity of those we trade with but rather to their self-love. We never talk to
them of our own necessities but of their own advantage.
How does the propensity to trade plus self-interest lead to the DOL? Why, once the DOL exists, do
people begin to “apply themselves to a particular occupation?”
The gains from exchange, and our natural willingness to do it, stimulate the division of labour. It is
worth us building up a surplus of what we personally make well in order to have something to trade
with other people. For instance, for an arrow maker, they specialize at making arrows allowing them to
make more arrows than they have the need for. This gives them something to exchange with others
thus making it beneficial to focus on efficient specialist production and get other things they need via
exchange. Consequently, everyone ends up with a mix of things they want, all of which are expertly
and efficiently produced.
p. 25: How does the DOL create, not by nature, but “from habit, custom, and education” more
unique, individuated persons? Why do commercial societies tend to be more individualistic, and
persons in less commercial societies more similar to one another?
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