Adam Smith on the Meaning of Work, Specialization, and the Division of Labor

Abstract

This chapter explores Adam Smith’s theories of work and labor, where “labor” refers to physical activity, or “toil and trouble.” “Work” encompasses labor’s purpose, social role, and meaning. The chapter explains why Smith is best understood as a welfare economist rather than a proponent of self-interested predictive economics. It also elucidates how labor builds wealth for Smith, the positive and negative effects of the division of labor, his value theory of labor, the paradox of value, the importance of specialization, and the equal moral worth of the laboring classes. Smith sees moral psychology and political economy as intertwined, which creates tensions between happiness, equality, and employment. This chapter addresses these, with special attention to the ways in which employment increases differences between people and repetitive labor makes daily life worse. It also discusses Smith’s prescriptions to mitigate the negative effects of commercial society and why, ultimately, societies and economies progress. For clarity’s sake, the chapter invokes Marx’s theories in comparison to Smith’s.