Adam Smith: On Civilisation and “savage” nations
Posted: July 1, 2011 Filed under: Basics and Definitions, Economists | Tags: Adam Smith, Wealth of Nations 8 CommentsA very interesting observation made by Smith is that in civilised societies, there will exist a significant proportion of people who are not employed. These people, however often consume in large quantities. Smith views this phenomenon wherein a society is able to carry on a stock of “not employed” persons as a symbol of great opulence, as the society as a whole must be producing in abundance to be able to provide more than what is required for the subsistence of its working population. Notice that this is not necessarily unemployment, as he refrains from describing whether the people he’s refering to are actively seeking employment or not.
In a “savage” nation, on the other hand, everyone engages in work for his own sustenance. “Savage” nations, according to Smith are those that remain largely untouched by trade, and are therefore, underdeveloped. The lack of availability of means of subsistence in such nations is reflected, according to Smith, in the fact that several societies have been known to destroy or abandon their infants, old and/or sick people. “Savage” nations may consist of “hunters and fishers“.
The “not employed” persons essentially consume part of the produce of those who are employed and are producing in excess. By refering to this state as one of opulence, Smith justifies the existence of a section of society which enjoys a situation of no-work but high levels of consumption. Why would such a section in society exist? They may be traditional womenfolk who refrain from engaging from active work outside the household, children, the elderly, warriors and kings, etc. Share your ideas and interpretations on\f the nature of these “not employed” persons.
Coming up next: The reason behind Opulence in Civilised Nations: Division of Labour and Geography
MisChief Economist 
Talking from the classical economics point of view, I’ll say that the ‘unemployed people’ are children, housewives (however some economists may call them as employment unpaid for) and also the retired people like you said.
However in reality this is not possible. As the rate at which the population is growing is phenomenally higher than the rate at which jobs are being created so all in all unemployment is a characteristic of any economy be it developed or not. However the unemployment rate is generally lower in developed countries and vice-versa.
I personally agree that the classical view of full employment is far from reality. Unemployment is a real problem. Unfortunately, most of our analysis is based on this unrealistic assumption. What surprises me is that even in the days when Smith wrote his book, the real situation in Europe was far from one of full employment, yet the theories found acceptance.
Hello Ruhi: That’s quite intriguing. I’m not sure about children and elderly but it’s sad that homemakers are considered “not employed” and I wish they are brought under payroll. I mean above and beyond the fact that homemaking is an art in itself, everything begins at home – child-rearing, nourishment, so on. Then why not is it a profession and a profession worthy of payroll. In times of unemployment when one spouse is jobless – it could be the husband or the wife – the one person who’ll never be jobless is the homemaker spouse. It even has the bright-side of people not looking down on homemakers anymore.
Just a thought. But is this “economically” feasible?
It is not economically infeasible, though the exact value of the work is difficult to measure as it includes many small tasks. But I totally agree that we should include the activities of homemakers. It would in fact help improve the position of women in society if they know they are effectively, usefully “employed” even at home. 🙂 This obviously will also enable men who want to stay home instead of working outside to be able to do so without fearing social stigma.
True to the bone, that will lift the stigma off it and encourage menfolk to take up the responsibility!
The military is paid to defend, kill, so on… it’s all the more reason homemaking is paid to rear, nourish, so on.
Ruhi,
I think that the statement ‘classical economics assumes full employment’ is an incorrect one. Smith did not assume so and nor did Ricardo. On this misunderstanding, do take a look at http://ssrn.com/abstract=1756923
Alex
Hi Alex,
Thanks for visiting my blog, and pointing out the errors. I have corrected it. 🙂
I am hoping to build a valuable resource on the works of the classicals, as I am currently studying them myself.
Ruhi,
Reading the works of classical economists is certainly very rewarding. All the best with building the resource.
Cheers,
Alex