2. Adam Smith, Workers’ Rights and the Political Side of the Market

ʻWhere the labourers and artisans are accustomed to work for low wages, and to retain but a small part of the fruits of their labour, it is difficult for them, even in a free government, to better their condition, or conspire among themselves to heighten their wages. But even where they are accustomed to a more plentiful way of life, it is easy for the rich, in an arbitrary government, to conspire against them, and throw the whole burthen of the taxes on their shouldersʼ (Hume 1752: 16).

ʻL’Angleterre est le pays du monde où la condition du peuple paroît la meilleure; cette heureuse circonstance ne peut pas être attribuée à la modération de impôts, puisque, proportion gardée, ils sont plus considérable que dans aucun autre pays de l’Europe; il faut plutôt en chercher le cause dans la nature du gouvernement, qui donne au peuple un degré de force et de résistance qui influe sur le prix de ses salairesʼ (italics mine) (Necker 1820a: I, 313). ʻLa classe de la société, dont le sort se trouve comme fixé par l’effet des loix sociales, est composée de tous ceux qui vivant du travail de leurs mains, reçoivent impérieusement la loi des propriétaires, et sont forcés de se contenter du salaire proportionné aux simples nécessités de la vie: leur concurrence et l’urgence de leurs besoins, constituent leur état de dépendance; et ces circonstances ne peuvent point changer. Tous les temps, tous les pays, présentent le même spectacle, et il n’y a d’exception, il n’y a d’adoucissement, à cette espece d’esclavage, que dans le petit nombre d’états, où la forme du gouvernement, laisse entre les mains du peuple quelque droit politique, dont la jouissance influe sur la considération, et lui procure quelque moyen de résistanceʼ (italics mine) (Necker 1820b: V, 323).

As noted, by way of example, by James Moher (1988: 92), ʻThe Combination Laws were a product of a highly regulated medieval society. Originally they were aimed at suppressing associations of both masters and journeymen—traders as well as producers—to prevent them raising the prices of their products and services. Apart from being regarded by the courts as a restraint of trade, such combinations were viewed by the legislature as conspiracies and as tending to usurp the wage-setting functions of the Stateʼ.

The tailors’ strike of 1720 provided the occasion for the passing of the first Combination Act as well as for an early prosecution of workmen for criminal conspiracy; the act voided all contracts, covenants or agreements for raising wages or reducing hours. Six years later, in 1726, new legislation covered the venerable wool trade, and in the middle of the century ʻthe statutory ban on combination was expanded to include trades other than tailoring and weavingʼ (Orth 1987: 189). For the next fifty years, legislation against combination continued for particular trades until the general Combination Act of 1799 (Orth 1991: 5–24).

As demonstrated by Robert W. Malcomson (1984), workers’ actions had reached a certain organisational level. ʻFor while many combined actions were certainly conservative in character—they involved an appeal to the law, and dutiful petitions to the local magistrates; they revealed a respect for patriarchal authority—other combinations were much more self-assertive and much less differential. In certain places and in certain circumstances workers claimed for themselves an independent authority: they made “unauthorised” claims to control some of their own conditions of labour, and to obtain justice for themselves; they claimed the right to act in their own interestʼ (Malcomson 1984: 157).

On the relevance of Steuart’s passages, I refer to Samuel Hollander (1973: 44). Some considerations not far from Steuart’s reasoning had been made by Josiah Tucker: ʻForeigners can never get rich in a strange Country, but by working cheaper or better than the Natives. And if they do so, though Individuals may suffer, the Publick is certainly a Gainer; as there is so much Merchandize to be exported upon cheaper Terms, or so much saved to the Merchant, whereby he may afford to export the cheaper. Not to mention, That by this means the Price of Labour is continually beat down, Combinations of Journeymen against their Masters are prevented, Industry is encouraged, and an Emulation exicitedʼ (Tucker 1750: 42). On this passage as an element indicative of the importance that the collective actions of the workers had taken in determining ʻincome distributionʼ, I refer to Stirati (1994: 19–20).

See Geoffrey Ingham (2008: ch. V).

We find the explicit theorising of this in John K. Galbraith (1956).

On the misuse of Smith’s ideas, see Emma Rothschild (2001: ch. 2) and Amartya Sen (2011). We will return to this topic in the Chapter 5.

See Cohen (1989: 69–70). This aspect, widely discussed by Smith’s readers, has recently been revisited by Evensky (2005b: 111–113) and Sandmo (2016: 239), who observes that ʻan important role for government was to design an economic system that as far as possible discouraged the creation of private cartels and monopoliesʼ. See also Hill (2016: 34–41).

According to Force (2003: 86) labelling Smith’s attitude using ʻthe terms “optimistic” and “pessimistic” may in fact be misleadingʼ.

It was an order ʻou tous le intérêts sont si perfaitement combinés, si inséparablement unis entre eux, que depuis les Souverains jusq’au dernier de eurs sujets, le bonheur des uns ne peut s’accroître que par le bonheur des autresʼ (Le Mercier de la Rivière 1767: Discourse préliminaire, VII). On this topic, I refer to Sheehan and Wahrman (2015: chs. 6–7).

Nevertheless, ʻthere is no suggestion, explicit or implicit, that combinations of workers should be permitted. As a moral philosopher educated in the school of Natural Law, he favoured perfect liberty, pure and simple, and followed his analysis wherever it took him without fear or favour to any special interests group. He favoured neither side in the determination of wages, but was not blind to the unfair consequences of the existing arrangementsʼ (Kennedy 2008: 146).

For Smith, natural rights ʻfall into two categories according to the injuries which can be done to an individual in his person and in his reputation. The former are subdivided into injuries to life and body, and injury to a person’s liberty to move around and combine with other people in marriage, business, etc. These are undoubtedly the most obvious rights of allʼ (Haakonssen 1981: 103).

Smith 1978, Report of 1762–3, v.68: 297; v.112–115: 315–316; v.131–134: 322–323; Report dated 1766, 82: 429; 93–95: 434–435. In the debate on the right of resistance Smith’s position was certainly known, and tended to be assimilated to the conservative views of David Hume, William Blackstone and Edmund Burke (Dickinson 1994: 171).

Smith 1978, Report of 1762–3, ii.107: 111; ii.115–116: 114–115; ii.147: 127.

Smith 1976, III.iii.8: 401–402; IV.iii.c.71: 620; V.i.a.5: 692; V.i.a.35: 703; V.i.a.36: 704–705; V.i.a.37: 705; V.i.a: 708; V.i.e.28: 753; V.i.g.22: 802; V.i.g.30: 806.

Those that seem contradictions for Lisa Hill are instead, for Sergio Cremaschi (1989), moral tensions inside Adam Smith’s thinking.

ʻIn recognizing something as injury to a person, we ascribe that in which the person has been injured as a right to the injured person—his or her physical integrity, freedom of movement, property in things, voluntary relations with other individuals, and so onʼ (Haakonssen 2016: 54).

He devoted an entire lesson of his course on Jurisprudence to the right of resistance, which was examined in a purely historical and constitutional context (Haakonssen 1981: 127–132).

Another writer who had represented an important benchmark in Smith’s intellectual development in relation to natural law; in fact he is immediately cited (Smith 1978, Report of 1762–3, i.1215: 8–9. I refer to Taylor (1965: 3–28, 63–72), Haakonssen (1981), Teichgraeber (1986: 68), and to Phillipson (2010: chs. 3–6).

ʻPerfect rights are of such necessity that a general allowing them to be violated must entirely destroy all society: and therefor such rights ought to be maintained to all even by violence: and severest punishments inflicted upon the violation of themʼ (Hutcheson 1747: 112).

As has been pointed out by Haakonssen (1996: 81–82), ʻMankind being what it is, this will on the whole mean that the negatively defined rights—rights not to be injured—or perfect rights, have practical priority over the positively defined rights—rights to receive some good—or imperfect rightsʼ. See also Stein (1979: 626–634).

ʻAs soon as mankind were considerably increased in numbers, and the more fertile clear lands occupied, many accidents would occasion that a great many would have no property, nor any opportunity of employing their labours on goods of their own for their support: and many on the other hand who had much property would need the labours of others, be willing to support them on this account, and give them further compensation: this would introduce the relation of master and servantʼ (Hutcheson 1755: II, 199).

As he himself noted: ʻIs this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers 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 inconveniency 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, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodgedʼ (Smith 1976, I.viii.36: 96). Not surprisingly, this passage has caused Smith to be seen as a champion of the workers and the poor (Fleischacker 2005: 66; McLean 2006: 140). But, on the other hand, his concern for the poor was always balanced by his passion for order (Hill 2016: 335). This aspect was underlined nearly a century ago by Viner (1927). For the multiple implications of this passage from the Wealth of Nations on poverty and for a less linear reading which restores some of Smith’s ambiguity, see Martin (2015).

In fact, ʻthe wise legislator respects the delicate concatenation of social and historical forces that have brought existing arrangements into being insensibly and by degreesʼ (Hill 2016: 331). Also, on Smith’s ambiguity about natural tendencies within the structure of capitalism, see Fairlamb (1996: 193–223, especially 207–209).

A similar remark was made by Lisa Hill, who wrote: ʻhe [Smith] seems to be suggesting that both [masters and workers] should desist from the practice and that the state should stop colluding with mastersʼ (Hill 2020: 133). As has been highlighted by Noell (1995: 229, 238), Smith ʻdid not recommend that Parliament should be concerned only with combinations of employers. In fact he opposed laws forbidding combinations of either typeʼ, believing ʻthat legislation should treat individuals and groups impartially, regardless of their position in the labour marketʼ. The theme of inequality, more generally, is addressed by Lisa Hill (2020: ch. 5).

According to Fleischacker (2004: 248–249) the workers were weaker than the capitalists but more aware of where their interests lay. For a different view, see Rothschild and Sen (2006: 328).

On Smith’s scepticism about public intervention: Forbes (1975: 180) and Coase (1976: 544). Both follow the classical study by Halévy (1928). Donald Winch (1978: 182) writes: ʻJudged by its view of the motives, ambitions, and pretensions of political actors, Smith’s politics was sceptical, pessimistic, or realistic, according to the reader’s tasteʼ.

As Heinz Lubasz (1995: 53) has emphasised, ʻDugald Stewart was one distinguished political economist who saw clearly that the direct object of Smith’s attack was not government policy but private vested interestʼ. In his Account of the Life and Writings of Adam Smith, presented to the Royal Society of Edinburgh in 1793, three years after Smith’s death, he explained how—according to Smith—certain private interests had so heavily influenced economic policy as to create a system, but ʻa false system of political economy, propagated by merchants and manufacturers; a class of individuals, whose interest is not always the same with that of the public, and whose professional knowledge gave them many advantagesʼ (Stewart 1980: 316).

On this passage, see the reflections by Rasmussen (2008: 71–76).

In particular as regards Smith’s concerns over the pressure interest groups could exert over policy and the legislative activities of parliament, see Dickinson (1994: 59, 68). Besides, ʻSmith’s main purpose in writing about corruption was to confront and criticize the corrupt yet legal norms of the elite classes, norms that enabled them to exploit and control those in the lower orders and, in the long run, undermine the prosperity of the nationʼ (Hill 2006: 651). More generally in Smith’s view, corruption ʻconsists in violations of the system of natural liberty , including violations that corrupt the naturally self-governing behaviour of individual actorsʼ (Hill 2020: 130).

As highlighted by Eric Schlisser (2017: 204–205), in these cases (ʻMasters are always and everywhere in a sort of tacit, but constant and uniform combination…ʼ and ʻWhenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the mastersʼ), ʻSmith offers universal generalizationsʼ.

ʻSmith thought the fruits of free trade would serve to diminish many of those conflicts between masters and workmen, but he also made it clear that economic growth would benefit the two parties in significantly different waysʼ (Teichgraeber 1986: 164). Similar observations had already been made by Samuel Hollander (1973: 185–187).

ʻThe demand for those who live by wages, it is evident, cannot increase but in proportion to the increase of the funds which are destined for the payment of wages. These funds are of two kinds; first, the revenue which is over and above what is necessary for the maintenance; and secondly, the stock which is over and above what is necessary for the employment of their masters. 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. The demand for those who live by wages, therefore, naturally increases with the increase of national wealth, and cannot possibly increase without it. It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest. England is certainly, in the present times, a much richer country than any part of North America. The wages of labour, however, are much higher in North America than in any part of Englandʼ (Smith 1976, I.viii.17: 86–87).

However, the conspiratorial activities of the masters were hardly ever judicially pursued. As Richard B. Morris (1937: 73) states, ʻthe absence of prosecution of masters’ combinations is especially characteristic of the prerevolutionary periodʼ.

As Richard B. Morris (1937: 84–85) points out, in America too approaches similar to those adopted in Britain were followed. While a certain tolerance was shown towards the combinations of masters, the attitude towards those organised by the workers was punitive and disciplinary.

On the tension between Smith’s confidence in the system of natural liberty and his polemics against combinations , see Turpin (2011: 43–45). In many passages, liberty seems to mean liberty of contract (Schlisser 2017: 216–220).

On the connections between the expansion of commerce and industry and the elimination of arbitrary and authoritarian decision-making by the sovereign, I refer to the pages on Montesquieu, Steuart and Millar by Albert O. Hirschman (1977: 70–93). In the case of a grand coup d’autorité (tyrannical action), Hirschman writes, ʻthe situation could still be saved if there were forces in the society that would rapidly mobilize to oppose the prince and make him retract or modify his policies. What was needed was a feedback or equilibrating mechanism that would restore conditions favorable to the expansion of commerce and industry should they be disturbedʼ (1977: 88). On this topic, see also Haakonssen (1996: 165–166).

As underscored by Noell (1995: 229), ʻSmith’s recommended policy of neutrality towards economic combinations stemmed from his opposition towards exclusive privilege in general […] there is in fact a linkage between this opposition and Smith’s reliance upon the concept of commutative justice […] Smith and the scholastics shared a distrust of different forms of labor market combination. Unlike the scholastics, however, Smith explicitly denied the efficacy and justice of laws which prohibited the formation of labor market combinationsʼ.

The process of counterbalancing would trigger naturally, as was to be explained later and as, in actual fact, had already been explained at least a century before by Jacques Savary, a French jurist particularly attentive to the dynamics animating the markets. See ch. 3.

ʻIn this respect workers and masters don’t differ from other sellers and buyers in a marketʼ (Lubasz 1995: 58).