Smith’s book contains two prominent theories, the invisible hand and the pin factory (which Walsh explains are contradictory ideas and that the pin factory is often overlooked). Smith sought to explain the policies that sought to promote rather than retard prosperity. He wanted to find why England had soared to the top. It wasn’t England’s vast empire, the quality of its soil, or even the laboring of its people; Smith believed that England’s wealth was due to the division of labor.
Then the book goes into the well-known story of the pin factory and how the jobs of creating a pin can be split up into about 18 people making a million pins every two weeks. The famous line about ‘self-love’ is also quoted - “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
“The Division of Labour is Limited by the Extent of the Market.” This was Smith’s third chapter which captured the idea that the scale of your specialization is regulated by the willingness of the market to accept your product. The take-home message Walsh thinks we should deduct from the first three chapters of Smith’s work was that wealth depends on specialization, and specialization depends on scale. The bigger nations with better transportation networks and access to rivers, roads, and the sea will be richer and grow more quickly. Last, he comments on the role of money and prices. He explains that there is a difference between real price and money price. Real price is the toil and trouble of acquiring it.
A for Bob.
ReplyDeleteBob is starting to get the bifocal metaphor, but isn't quite there yet.
What are bifocals?
Eyeglasses that allow you to see the same thing or two different things?
Eyeglasses that allow you to see something in one way or in two?
Is Warsh's point that Smith is seeing one economic story in two ways, or two different stories?
The author uses the word "cavils" on pg. 40. There's extra credit for the first person to hand write a definition of that, use it in a new sentence, explain it's meaning in the context of Smith, and turn that in during class.