Adam Smith: Of the Wages of Labour Essay

Adam Smith spoke about the existing relationship between wages and labor and compared it to how it is observed in other countries like North America, India and China. In this section of his book, he had described how things would have been like if laborers had managed and owned their produce. Smith had stated that in the original state of things, the finished product simply belongs to the laborer. Things would have gradually become cheaper since almost everyone with a backbone could rely on their own work produce. Even if the produce is made by a small number of laborers, the commodities produced would most likely be of equal standards compared to other laborers since it is not marked by profit for others but for oneself. In reality, the concept of ownership and private properties has long been the determinants of people’s places. Smith has said that in every business undertaking, every laborer depends upon a master or owner to obtain the necessary materials they need for work and for their survival needs. The master shares in the produce of a laborer through profit, which is the value that is placed for the work produced. Whatever contract the laborer and master agrees upon the end result determines the wage received by the laborer. Most often, the interests of the masters and laborers are in conflict, which creates tension and dilemma in the relationship. The laborers desire to get as much from their produce as they can but their masters would only offer them a minimal amount than their asking price. Smith also noted that most masters merge to contain or maintain low wages since it will affect their share of the profit while laborers unite to raise the stakes. In the long-run, the laborer may be a necessity to his master as the master is to the laborer but the relationship is not that compulsory on the part of the master. This is due to the fact that laborers live by their work, which should be sufficient enough to maintain a decent living. Smith went on to express what he had observed from the lowest species of common laborers in Europe who have a difficulty in sustaining a large family. Most often, the wages of common laborers are not enough to feed their children of four. The amount that a laborer usually gets is sufficient enough for only one person. Herein lies the sentiments of the common laborers who do heavy menial work yet are not paid sufficiently for their dues. Smith goes on to compare the high wages in North America for the common laborers to those of European countries. According to him, England is a much wealthier country than North America but in relation to the wages it gives to laborers, the latter gains the upper hand. In Great Britain and most other European countries, it was said that wages were not expected to be doubled in less than five hundred years. Labor is so well rewarded in North America, China and India that families with numerous children are a source of opulence and prosperity to the parents since they contribute more income to the family. The demand for those who live by wages is said to increase in proportion to the increase of the funds. According to Smith, these funds are of two kinds. First is the concept of revenue, which is what is necessary for the maintenance of the business and second is the stock which is needed for the employment of the masters. Smith has asserted that if there is an increase in the revenue and stock of a business, then there is an increase in a nation’s wealth and this is what he has observed in the countries he mentioned in the text. Adam Smith had made good observations regarding his view of wages and labor in contemporary modern times and he had been able to clearly define what ails the relationship between laborers and it masters. Reference: Smith, A. (1994). Of the Wages of Labour. The Wealth of Nations. Modern Library. New York: Random House.