Getting Smith Right
9 April 2006
Editors, New York Review of Books
To the Editors:
Reviewing Daniel Cohen's Globalization and Its Enemies, John Gray writes that Cohen "distinguishes two kinds of economic growth - the 'Smithian' variety that reflects Adam Smith's vision in The Wealth of Nations, in which growth is achieved by utilizing the benefits of the division of labor, and a 'Schumpeterian' variety that is driven by continuous technological innovation" ("The Global Delusion," April 27).
These are not "two kinds of economic growth"; one is intimately entwined with the other. And none other than Adam Smith explained that technological innovation's most lively and reliable spark is an expanding division of labor. In Book I, Chapter I of The Wealth of Nations, Smith wrote that
“every body must be sensible how much labour is facilitated and abridged by the application of proper machinery. It is unnecessary to give any example. I shall only observe, therefore, that the invention of all those machines by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour. Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things. But in consequence of the division of labour, the whole of every man's attention comes naturally to be directed towards some one very simple object. It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of performing their own particular work, wherever the nature of it admits of such improvement."
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editors, New York Review of Books
To the Editors:
Reviewing Daniel Cohen's Globalization and Its Enemies, John Gray writes that Cohen "distinguishes two kinds of economic growth - the 'Smithian' variety that reflects Adam Smith's vision in The Wealth of Nations, in which growth is achieved by utilizing the benefits of the division of labor, and a 'Schumpeterian' variety that is driven by continuous technological innovation" ("The Global Delusion," April 27).
These are not "two kinds of economic growth"; one is intimately entwined with the other. And none other than Adam Smith explained that technological innovation's most lively and reliable spark is an expanding division of labor. In Book I, Chapter I of The Wealth of Nations, Smith wrote that
“every body must be sensible how much labour is facilitated and abridged by the application of proper machinery. It is unnecessary to give any example. I shall only observe, therefore, that the invention of all those machines by which labour is so much facilitated and abridged, seems to have been originally owing to the division of labour. Men are much more likely to discover easier and readier methods of attaining any object, when the whole attention of their minds is directed towards that single object, than when it is dissipated among a great variety of things. But in consequence of the division of labour, the whole of every man's attention comes naturally to be directed towards some one very simple object. It is naturally to be expected, therefore, that some one or other of those who are employed in each particular branch of labour should soon find out easier and readier methods of performing their own particular work, wherever the nature of it admits of such improvement."
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Monday January 8, 2007 at 10:16am