Of all sections in Adam Smith’s Wealth of Nations, I think my favorite for the moment is Book I, Chapter 8.
When I shared this passage with Tuzla’s workers last night, they were astonished. For it is here that A Smith openly admits what all workers suspected all along; namely, that their penury arose from an original appropriation of property and capital in which they played no role but whose consequences they must endure with the full cooperation of their representatives in Sarajevo.
The passage begins as follows:
In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him (I.8.2).
Neither landlord nor master. Unbelievable.
But then Smith describes what all of them believe to have been the state of affairs in the former Yugoslavia:
Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labour; and as the commodities produced by equal quantities of labour 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 (I.8.3).
Ever greater efficiency leading to ever less work and ever lower costs of goods.
But then Smith throws cold water in our faces. For what if workers in one sector, detergent for example, were able to produce ten times more efficiently than, let’s say, automobile tires, whose efficiency only increased two-fold. Smith describes this possibility as follows:
But though all things would have become cheaper in reality, in appearance many things might have become dearer than before, or have been exchanged for a greater quantity of other goods. Let us suppose, for example, that in the greater part of employments the productive powers of labour had been improved to tenfold, or that a day’s labour could produce ten times the quantity of work which it had done originally; but that in a particular employment they had been improved only to double, or that a day’s labour could produce only twice the quantity of work which it had done before. In exchanging the produce of a day’s labour in the greater part of employments, for that of a day’s labour in this particular one, ten times the original quantity of work in them would purchase only twice the original quantity in it. Any particular quantity in it, therefore, a pound weight, for example, would appear to be five times dearer than before. In reality, however, it would be twice as cheap. Though it required five times the quantity of other goods to purchase it, it would require only half the quantity of labour either to purchase or to produce it. The acquisition, therefore, would be twice as easy as before (I.8.4).
No landlords. No masters. And, yet, because Smith is describing a relationship of commodities to commodities, and labor to labor, the relative “costs” continue to mediate social relations even in the absence of private property or capital markets.
And so we have the 1970s, which every worker in the former Yugoslavia remembers wistfully as the good old days. In fact, the good old days were already heavily leveraging the Yugoslavian future. So efficient were workers in the former Yugoslavia that they had to work less and less for more and more (I.8.3). But because their society was still mediated by abstract labor, dropping prices and a flood of cheap goods threatened to lead to the forced closures of enterprises all across the state. Which is why, when the US pulled the dollar off the gold standard in 1972 and flooded world markets with cheap US dollars, Marshal Tito eagerly snapped up the opportunity. No landlords. No masters. But here the Yugoslavians were leveraging their futures not in order to produce more leisure time, but in order to produce its opposite. The factors remained running full-bore throughout the 1970s in thanks largely to cheap US dollars. But then in the early 1980s, when the US reined in its supply of dollars, the party ended.
What this means for more than fifty per cent of Bosnians and Herzegovinians who are out of work is that their efficiency in the 1960s ended up costing them big time. For, landlords or no landlords, in societies whose social relations are mediated by abstract labor, there is no choice. For although your efficiencies will produce leisure time in the short run, in the long run the compulsion, the necessity, for ever greater efficiency will never permit you to actually claim that leisure. The only solution is full factories — work — even when, owing to your very efficiencies, there is no work to be had.
But Smith does not stop there. A little further on, Smith will describe the very oligarchic strangle-hold that has forced those few Bosnians and Herzegovinians who do enjoy employment to work for only a fraction of the wages on offer elsewhere in Europe:
A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long-run the workman may be as necessary to his master as his master is to him, but the necessity is not so immediate. We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and every where in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is every where a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of (I.8.12-13).
Tuzla’s workers are intimately familiar with these combinations of masters and employers and with the distortions they introduce throughout the Bosnian and Herzegovinian economy. They know — as Smith too knew — that this combination of capitalists is “the natural state of things.”
So, is Smith a Marxist? No. Of course not. Unlike von Hayek, or Menger, or Mises, however, who clearly had “drunk the Kool-Aid” as we say, Smith could look capitalism in the eye and call it by its name. For he knew, as these mystics or snake-oil salesmen did not know, that capitalism was a comprehensive, integrated, total system that left no room for what they mistakenly took for “freedom.” Where they strut about proclaiming the freedom of the working man, Adam Smith was perfectly comfortable calling the working man “a commodity,” which, like every other commodity, obeyed the dictates of supply and demand (I.8.39).
Where Adam Smith differed from Marx was not in the facts, which are plain for all to see; but in his interpretive categories. For, unlike Marx, Smith mistook the historically and socially specific relationships of domination and submission peculiar to capitalism for transhistorical, inalterable, realities fixed by the nature of human being as such. And in this respect he differed little from von Hayek, or Menger, or Mises, none of whom were particularly interested or observant students of history.
Marx, by contrast, saw this historical moment as contained and limited, constrained by its own unique circumstances. In some as yet unspecified future, he felt certain that workers would face up to this peculiar form of self-domination, a society structured completely around labour, labour value, and work. He felt certain that at some point human beings would elect to organize their social relations in such a manner as to respect the many, many different ways to judge value.
The workers of Tuzla are still stunned. Men and women who have built their entire lives around labour, stunned at Adam Smith’s honesty. But stunned as well that maybe their future, the future of emancipation, need not center upon labour.