Adam Smith and the Natural Wage: Sympathy, Subsistence and Social Distance
Stabile, Donald R., Review of Social Economy
In the last two decades, scholars with a socioeconomic bent have recognized Adam Smith's standing as a social economist (Johnson 1990: 248, and Young 1985: 118-119, for example). Rather than interpreting him as the adherent of individualism, they have found that he held to what Jerry Evensky calls "the Smithian perspective on the role of community values" (Evensky 1992b: 21). Ian Simpson Ross's recent biography of Smith clinches the case for seeing Smith for the liberal and humane thinker that he was. As Ross writes, concerning narrow economic renditions of Smith, "The burden of the biography of Adam Smith now concluded is that any such reductive view of him is specious" (Ross 1995: 419).
To be sure, this recognition of Smith as a social economist renews an earlier appreciation that nearly vanished due to "three or more decades of mainly positivistic readings of the economics of Adam Smith" (Young and Gordon 1992: 1). Over a century ago, Henry George found Smith's writing "an arsenal from which lovers of liberty and justice may draw weapons for victories remaining to be won" (George 1981: 168-169) and John Kells Ingram thought Smith less vulnerable than other economists to charges of "materialism" (Ingram 1888: 109). In his biography of Smith, John Rae indicated Smith had an abiding interest in problems caused by poverty (Rae 1895: 229-231). Finally, Glen Morrow long ago demonstrated that Smith understood "the limited validity of his individualistic economics" (Morrow 1973 : 86).
This article will add to Smith's ranking as a social economist by looking at his views on wages. In The Wealth of Nations (WN) Smith held that the first objective of political economy was "to provide a plentiful revenue or subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves" (Smith 1976bI: 449, emphasis in original). In the market economy that Smith described, a "subsistence for the people" would depend on their wages or what he called the natural price of labor. As will be indicated below, analysts of Smith have contended, in Jeffrey T. Young's words, that "Smith's concept of natural price is in fact a descendant of the scholastics' just price" (Young 1986: 376; see also Young 1985: 150-151). This article will concentrate on Smith's secular definition of the natural wage as having a correspondence to the medieval religious notion of a just wage. The natural wage of labor meant to Smith, as the just wage had to medieval thinkers, that society should be concerned when labor markets did not provide a subsistence that was "plentiful." Smith's study of wages was a significant advance over his predecessors, who emphasized prices.
The just price of the Schoolmen and the natural price of Smith have previously been linked on the basis of distributive and communitative justice (Young and Gordon 1992: 4; De Roover 1951: 37). With its stress on labor, this article will focus on the relationship between wages and work and the formation of the values held by workers. Joseph Cropsey has observed that Smith favored capitalism because it was the means that made "freedom possible," but appreciated that freedom required individuals who "are impelled from within . . . to do the things needful for social existence" (Cropsey 1957: x-xi). As a result, he was concerned with how the work and wages of workers in a commercial society influenced their ability for being "impelled from within" to behave with social responsibility. His concern was that while markets needed virtuous humans to function efficiently, market activities were part of the environment that affected virtue, even among workers. A similar appreciation for this twofold relationship between markets and moral behavior can also be found in Saint Thomas Aquinas's analysis of the just price.
THE JUST PRICE AND THE JUST WAGE
"Natural riches," Aquinas wrote in the Summa Theologica, "are those by which a man is supplied with help to make good what he lacks by nature - for instance, food, drink, clothing, vehicles and dwellings, and the like. …