Saturday, October 4, 2003

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Adam Smith on outsourcing

One of the perks of teaching at the University of Chicago is that the school requires much of its faculty to teach beyond their area of expertise. I'm teaching in one of the "core sequences" at the University of Chicago this quarter, entitled Power, Identity, and Resistance. You can access a copy of the syllabus here or on my teaching page.

We're currently immersed in Adam Smith's An Inquiry Into the Nature and Causes of the Wealth of Nations. There are many great qualities about the work, but what strikes me today is its topicality -- like all great works in social science, Smith's observations are constantly relevant.

For example, consider this passage from Book I, Chapter X, Part II -- "Inequalities occasioned by the Policy of Europe":

The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the others from employing whom they think proper. To judge whether he is fit to be employed may surely be trusted to the discretion of the employers whose interest it so much concerns. The affected anxiety of the law-giver lest they should employ an improper person is evidently as impertinent as it is oppressive.


posted by Dan on 10.04.03 at 04:56 PM


Maybe Conseratives will be a little more willing to stick up for the underlying principle of Lochner v. New York...But then again, probably not.

posted by: Bill S. on 10.04.03 at 04:56 PM [permalink]

"An Inquiry Into The Nature And Causes Of The Wealth Of Nations" by Adam Smith is also available from Project Gutenberg at:

posted by: Andrew Price on 10.04.03 at 04:56 PM [permalink]

This is all fine, but it neglects the destabilizing force of Globalization. Globalization as a market transport and labor commoditization process inherently devalues the skill of labor. How do we know this?

We know this because consumers given scarce resources repeatedly tend to choose lower priced items at poorer quality standards than higher priced items with moderate quality increases. These are empirical micro-economic observations.

In that case, by producing products in countries with much lower standards of living and producing types of products that negate value added marketing then market forces disenfranchise skilled labor.

Nor are these new foreign workers somehow much happier in their situation. Generally, they are exploited to a much higher degree than Western workers and the distortions introduced in the national economy further disadvantage even unrelated workers and businesses.

While in theory, many macro-economists refer to preferred ideal where labor is increasingly commoditized then this is a disasterous result in both personal lives and in economic terms.

For there to be a full commoditization of labor that would mean that anyone would be able to do anyone else's job at any time.

This would necessarily lead to the destruction of valuation of experience, skills, and talent. It would also create a "Communist" nightmare. Without a merit-based valuation if all jobs were structured this way, then everyone could get paid the same (low) wage and nothing much would get done because no one would be much better at doing anything than anyone else. And it would stay this way because there wouldn't be much incentive to take the risks or invest in the skills to be better than others if there was no reward for this.

This is the exact opposite of Capitalism. Yet this is the very outcome being created by the spector of Globalization that creates legions of low-paid manufacturing jobs overseas, legions of low-paid service jobs domestically, and a few very highly paid but corrupt and incompetent corporate executives who benefit most from the system.

posted by: Oldman on 10.04.03 at 04:56 PM [permalink]

Well, this is out of my area too, but since I'm not a prof, I don't have an area. I looked over the syllabus, and I'm sort of glad I'm not in this class (and as a result I had one of those nightmares last night where I'm in a course and really behind in the readings). If this is meant to be a freshman or lower-level Western Civ style survey, as is the implication, I don't quite understand why we start with Adam Smith, go to Marx and Engels, and finish with Durkheim or something like that, and I was looking for more explanation of the "resistance" part of the course title. Is this Dan's or UC's title preference?

It seems to me that if I were teaching such a course I might go the other direction, start with Plato's >Republic, go to Augustine's City of God, THEN Adam Smith, then the Federalist Papers, and finally Tocqueville's Democracy in America.

I think my point would be to develop the idea that the ideal state is an ideal that can't be realized in this world, and the Anglo-American tradition has placed worthwhile barriers to prevent the state from imposing idealistic constraints on the citizens, and these barriers work about as well as such things can.

Actually, if it were me, we'd read the Republic in Greek and City of God in Latin, too. I'm only half kidding.

Why consult European dwarves of the 19th and 20th centuries in this matter? And how "resistance" fits into US life as other than a precious upper-middle-class fantasy is beyond me.

posted by: John Bruce on 10.04.03 at 04:56 PM [permalink]

John: Adam Smith a 19th century European Dwarf?

Smith proposed the revolutionary concept of the invisble hand whereby people working working soley for their own ends would still be improving the lot of all.

Smith, by the way, was not an admirer of the grubby English shop keeper.

posted by: tallan on 10.04.03 at 04:56 PM [permalink]

Since I proposed retaining Smith in my own ideal syllabus that would also contain Plato, Augustine, the Federalists, and Tocqueville, I hope you'll give me credit for considering Adam Smith an 18th century English giant, in CONTRAST with Marx, Engels, and Durkheim.

posted by: John Bruce on 10.04.03 at 04:56 PM [permalink]

Dear John Bruce,

No offense but you should probably take the advice of your dream and realize that you are hopelessly behind on the relevant readings and this is the reason why you come off as completely clueless to other commentators.

If you look at the list of readings, one can see a theme of realism in socio-political and economic-labor forces. Hence why Smith and Marx and not Plato and Augustine.

While I revere the latter and have read Classical and Dark Age Latin as well as some Greek at a ivy league university, they are idealists far removed from the practical concerns of socio-economic reality.

Marx for instance have been demonized but had some good insights into the inequities and inefficiencies of laizre-faire capitalism. His prescriptions were in general bollocks in my opinion, but that didn't mean that he didn't get a few things right about the central issues of labor-capital tensions.

Overall, pure market driven capitalism as a force that can operate in a vacuum has been completely discredited except alas in the radical right-wing of our own sadly delapidated conservative movement.

In modern times, the conflict of interest has become even more convoluted than in Marx's era. Now there a serious conflict of interest between labor-management-government-shareholder-community-nationality.

The name of of this misbogotten monstrosity is often called simply and euphemistically multinational corporate globalism.

Even in more sophisticated discussions such as of the Polity in Aristotle can't fathom this cruel conundrum. The closest Classical readings one might suggest on this topic are not standard ideal Civics texts such as the only Frenchman whom Americans really revere, but actually if one might be so bold the Peloponesian War by Thucidyes. The socio-economic subtext of Athenian military-colonial expansion is quite pertinent for modern times.

posted by: Oldman on 10.04.03 at 04:56 PM [permalink]

Dudes, you didn't go to college at the University of Chicago, did you? If you had, you'd know that the Common Core was carefully designed to avoid overlap and thus maximize the number and type of classic works the students read. Classical texts are in the Humanities core (esp the infamous Greek Thought and Lit); medieval and Renaissance stuff is in Western Civ; and the 18th and 19th century foundations of social science -- esp the holy quadrumvirate of Smith, Marx, Weber, and Freud -- are in the class Drezner is teaching, which I think used to be called something else. So believe me, the kiddies will get to Plato, Augustine, Toqueville, etc. Maybe not Federalist... Chicago is oddly uninterested in Roman and American stuff. And by the way, instructors in these courses are not allowed to choose their own texts -- it's all been done by the sanctified Common Core committees for a million years.

posted by: Troutgirl on 10.04.03 at 04:56 PM [permalink]

Oldman's comments are baffling when they are not actively idiotic.

posted by: Johnathan on 10.04.03 at 04:56 PM [permalink]

"We know this because consumers given scarce resources repeatedly tend to choose lower priced items at poorer quality standards than higher priced items with moderate quality increases. These are empirical micro-economic observations."

Oldman, that is simply not true. If it were, we would all drive Suzukis, use emachine computers, and watch 17 inch televisions with tinny little speakers.

posted by: Roger Sweeny on 10.04.03 at 04:56 PM [permalink]

Shameless pedantry corner. Smith was Scottish, not English - part of the "Scottish Enlightenment" along with David Hume and others.

posted by: Al on 10.04.03 at 04:56 PM [permalink]

"Oldman's comments are baffling when they are not actively idiotic."

Oh, is he a regular? I read his comments in the more recent WMD thread, and that's a very good description.

posted by: Yehudit on 10.04.03 at 04:56 PM [permalink]

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