He offers models for how people should treat themselves and others. He argues that scientific method can lead to moral discovery, and he presents a blueprint for a just society that concerns itself with its least well-off members, not just those with economic success. Adam Smith's philosophy bears little resemblance to the libertarian caricature put forth by proponents of laissez faire markets who describe humans solely as homo economicus. For Smith, the market is a mechanism of morality and social support.
Adam Smith was born in June, , in Kirkcaldy, a port town on the eastern shore of Scotland; the exact date is unknown. His father, the Comptroller and Collector of Customs, died while Smith's mother was pregnant but left the family with adequate resources for their financial well being. Young Adam was educated in a local parish district school. In , at the age of thirteen he was sent to Glasgow College after which he attended Baliol College at Oxford University. His positive experiences at school in Kirkcaldy and at Glasgow, combined with his negative reaction to the professors at Oxford, would remain a strong influence on his philosophy.
In particular, Smith held his teacher Francis Hutcheson in high esteem. One of the early leaders of the philosophical movement now called the Scottish Enlightenment, Hutcheson was a proponent of moral sense theory, the position that human beings make moral judgments using their sentiments rather than their "rational" capacities. According to Hutcheson, a sense of unity among human beings allows for the possibility of other-oriented actions even though individuals are often motivated by self-interest. The moral sense, which is a form of benevolence, elicits a feeling of approval in those witnessing moral acts.
Hutcheson opposed ethical egoism, the notion that individuals ought to be motivated by their own interests ultimately, even when they cooperate with others on a common project. The term "moral sense" was first coined by Sir Anthony Ashley Cooper, Third Earl of Shaftesbury , whose work Smith read and who became a focal point in the Scots' discussion, although he himself was not Scottish.
Although Shaftesbury did not offer a formal moral sense theory as Hutcheson did, he describes personal moral deliberation as a "soliloquy," a process of self-division and self-examination similar in form to Hamlet's remarks on suicide. This model of moral reasoning plays an important role in Smith's books. The Scottish Enlightenment philosophers, or the literati, as they called themselves, were a close-knit group who socialized together and who read, critiqued, and debated each other's work.
They met regularly in social clubs often at pubs to discuss politics and philosophy. Shortly after graduating from Oxford, Smith presented public lectures on moral philosophy in Edinburgh, and then, with the assistance of the literati, he secured his first position as the Chair of Logic at Glasgow University. His closest friendship in the group—and probably his most important non-familial relationship throughout his life—was with David Hume , an older philosopher whose work Smith was chastised for reading while at Oxford.
Hume was believed to be an atheist, and his work brought into question some of the core beliefs in moral philosophy. In particular, and even more so than Hutcheson, Hume's own version of moral sense theory challenged the assumption that reason was the key human faculty in moral behavior. He famously asserted that reason is and ought to be slave to the passions, which means that even if the intellect can inform individuals as to what is morally correct, agents will only act if their sentiments incline them to do so.
An old proverb tells us that you can lead a horse to water but that you can't make it drink. Hume analogously argues that while you might be able to teach people what it means to be moral, only their passions, not their rational capacities, can actually inspire them to be ethical. This position has roots in Aristotle 's distinction between moral and intellectual virtue.
Smith, while never explicitly arguing for Hume's position, nonetheless seems to assume much of it. And while he does not offer a strict moral sense theory, he does adopt Hume's assertion that moral behavior is, at core, the human capacity of sympathy , the faculty that, in Hume's account, allows us to approve of others' characters, to "forget our own interest in our judgments," and to consider those whom "we meet with in society and conversation" who "are not placed in the same situation, and have not the same interest with ourselves" Hume: Treatise , book 3.
Smith echoes these words throughout A Theory of Moral Sentiments. In this book, he embraces Hume's conception of sympathy, but rejects his skepticism and adds, as we shall see, a new theory of conscience to the mix. However, focusing on Hume's observations also allow us to see certain other themes that Smith shares with his Scottish Enlightenment cohort: in particular, their commitment to empiricism. For Hume, this epistemology would bring into question the connection between cause and effect—our senses, he argued, could only tell us that certain events followed one another in time, but not that they were causally related.
For Smith, this meant a whole host of different problems. He asks, for example, how a person can know another's sentiments and motivations, as well as how members can use the market to make "rational" decisions about the propriety of their economic activity. At the core of the Scottish project is the attempt to articulate the laws governing human behavior. Smith and his contemporary Adam Ferguson are sometimes credited with being the founders of sociology because they, along with the other literati, believed that human activities were governed by discoverable principles in the same way that Newton argued that motion was explainable through principles.
Newton, in fact, was a tremendous influence on the Scots' methodology. In an unpublished essay on the history of astronomy, Smith writes that Newton's system, had "gained the general and complete approbation of mankind," and that it ought to be considered "the greatest discovery that ever was made by man. Smith describes it as "the discovery of an immense chain of the most important and sublime truths, all closely connected together, by one capital fact, of the reality of which we have daily experience" EPS , Astronomy IV. While Smith held the chair of logic at Glasgow University, he lectured more on rhetoric than on traditional Aristotelian forms of reasoning.
There is a collection of student lecture notes that recount Smith's discussions of style, narrative, and moral propriety in rhetorical contexts. These notes, in combination with his essay on astronomy, offer an account of explanation that Smith himself regarded as essentially Newtonian. According to Smith, a theory must first be believable ; it must soothe anxiety by avoiding any gaps in its account. Again, relying upon a basically Aristotelian model, Smith tells us that the desire to learn, and the theories that result, stems from a series of emotions: surprise at events inspires anxieties that cause one to wonder about the process.
This leads to understanding and admiration of the acts and principles of nature. By showing that the principles governing the heavens also govern the Earth, Newton set a new standard for explanation. A theory must direct the mind with its narrative in a way that both corresponds with experience and offers theoretical accounts that enhance understanding and allow for prediction.
The account must fit together systematically without holes or missing information; this last element—avoiding any gaps in the theory—is, perhaps, the most central element for Smith, and this model of philosophical explanation unifies both his moral theories and his political economy. As a young philosopher, Smith experimented with different topics, and there is a collection of writing fragments to compliment his lecture notes and early essays.
These include brief explorations of "Ancient Logics," metaphysics, the senses, physics, aesthetics, the work of Jean-Jacque Rousseau, and other assorted topics. Smith's Scottish Enlightenment contemporaries shared an interest in all of these issues. While the works offer a glimpse into Smith's meditations, they are by no means definitive; few of them were ever authorized for publication.
Smith was a meticulous writer and, in his own words, "a slow a very slow workman, who do and undo everything I write at least half a dozen of times before I can be tolerably pleased with it" Corr. As a result, he ordered sixteen volumes of unpublished writing burnt upon his death because, presumably, he did not feel they were adequate for public consumption.
Smith scholars lament this loss because it obfuscates the blueprint of his system, and there have been several attempts of late to reconstruct the design of Smith's corpus, again with the intent of arguing for a particular relationship between his major works. After holding the chair of logic at Glasgow for only one year — , Smith was appointed to the Chair of Moral Philosophy, the position originally held by Hutcheson.
He wrote The Theory of Moral Sentiments , first published in , while holding this position and, presumably, while testing out many of his discussions in the classroom. While he spoke very warmly of this period of his life, and while he took a deep interest in teaching and mentoring young minds, Smith resigned in to tutor the Duke of Buccleuch and accompany him on his travels.
It was not uncommon for professional teachers to accept positions as private tutors. The salary and pensions were often lucrative, and it allowed more flexibility than a busy lecturing schedule might afford. In Smith's case, this position took him to France where he spent two years engaged with the philosophes —a tight-knit group of French philosophers analogous to Smith's own literati—in conversations that would make their way into The Wealth of Nations. How influential the philosophes were in the creation of Smith's political economy is a matter of controversy. Some scholars suggest that Smith's attitudes were formed as a result of their persuasion while others suggest that Smith's ideas were solidified much earlier than his trip abroad.
Whatever the case, this shows that Smith's interests were aligned, not just with the Scottish philosophers, but with their European counterparts. Smith's writing was well-received in part because it was so timely. He was asking the deep questions of the time; his answers would change the world.
It was first published in and was praised both by his friends and the general public. In a letter written much later, he referred to it as the "very violent attack I had made upon the whole commercial system of Great Britain" Corr. The Theory of Moral Sentiments went through six editions in Smith's lifetime, two of which contained major substantive changes and The Wealth of Nations saw four different editions with more minor alterations.
Smith indicated that he thought The Theory of Moral Sentiments was a better book, and his on-going attention to its details and adjustments to its theory bear out, at least, that he was more committed to refining it. Eventually, Smith moved to Edinburgh with his mother and was appointed commissioner of customs in ; he did not publish anything substantive for the remainder of his life.
Adam Smith died on July 17, After his death, The Wealth of Nations continued to grow in stature and The Theory of Moral Sentiments began to fade into the background. In the more than two centuries since his death, his published work has been supplemented by the discoveries of his early writing fragments, the student-authored lectures notes on his course in rhetoric and belles-letters , student-authored lecture notes on jurisprudence, and an early draft of part of The Wealth of Nations , the date of which is estimated to be about The latter two discoveries help shed light on the formulation of his most famous work and supply fodder for both sides of the debate regarding the influence of the philosophes on Smith's political economy.
As stated above, Smith is sometimes credited with being one of the progenitors of modern sociology, and his lectures on rhetoric have also been called the blueprint for the invention of the modern discipline of English; this largely has to do with their influence on his student Hugh Blair, whose own lectures on rhetoric were instrumental in the formation of that discipline.
The Theory of Moral Sentiments played an important role in 19th century sentimentalist literature and was also cited by Mary Wollstonecraft to bolster her argument in A Vindication of the Rights of Women : Smith's moral theories experienced a revival in the last quarter of the twentieth century. Secondary sources on Smith flooded the marketplace and interest in Smith's work as a whole has reached an entirely new audience.
There are two noteworthy characteristics of the latest wave of interest in Smith. The first is that scholars are interested in how The Theory of Moral Sentiments and The Wealth of Nations interconnect, not simply in his moral and economic theories as distinct from one another. The second is that it is philosophers and not economists who are primarily interested in Smith's writings. They therefore pay special attention to where Smith might fit in within the already established philosophical canon: How does Smith's work build on Hume's?
How does it relate to that of his contemporary Immanuel Kant? To what extent is a sentiment-based moral theory defensible? And, what can one learn about the Scots and eighteenth-century philosophy in general from reading Smith in a historical context? These are but a few of the questions with which Smith's readers now concern themselves. Hutcheson, Hume, and Smith were unified by their opposition to arguments put forth by Bernard Mandeville.
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A Dutch-born philosopher who relocated to England, Mandeville argued that benevolence does no social good whatsoever. Bad behavior has positive social impact. Without vice, we would have, for example, no police, locksmiths, or other such professionals. Without indulgence, there would be only minimal consumer spending. Virtue, on the other hand, he argued, has no positive economic benefit and is therefore not to be encouraged.
But Mandeville took this a step further, arguing, as did Thomas Hobbes , that moral virtue derives from personal benefit, that humans are essentially selfish, and that all people are in competition with one another. Hobbes was a moral relativist , arguing that "good" is just a synonym for "that which people desire.
While he argues that virtue is the intentional act for the good of others with the objective of achieving that good, he casts doubt on whether or not anyone could actually achieve this standard. Smith seems to treat both philosophers as if they argue for the same conclusion; both offer counterpoints to Shaftesbury's approach. Tellingly, Mandeville writes wistfully of Shaftesbury's positive accounts of human motivation, remarking they are "a high Compliment to Human-kind," adding, however, "what Pity it is that they are not true" Fable, I, Smith was so opposed to Hobbes's and Mandeville's positions that the very first sentence of The Theory of Moral Sentiments begins with their rejection:.
However selfish man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though they derive nothing from it except the pleasure of seeing it. TMS I. While it is often assumed that people are selfish, Smith argues that experience suggests otherwise. People derive pleasure from seeing the happiness of others because, by design, others concern us. With this initial comment, Smith outlines the central themes of his moral philosophy: human beings are social, we care about others and their circumstances bring us pleasure or pain.
It is only through our senses, through "seeing," that we acquire knowledge of their sentiments. Smith's first sentence associates egoism with supposition or presumption, but scientific "principles" of human activity are associated with evidence: Newtonianism and empiricism in action.
With few exceptions, the sentences are easy to follow, and it is written in a lively manner that speaks of its rehearsal in the classroom. Smith has a particular flair for examples, both literary and from day-to-day life, and his use of "we" throughout brings the reader into direct dialogue with Smith. The book feels like an accurate description of human emotions and experience—there are times when it feels phenomenological , although Smith would not have understood this word. He uses repetition to great benefit, reminding his readers of the central points in his theories while he slowly builds their complexity.
At only pages all references are to the Glasgow Editions of his work , the book encompasses a tremendous range of themes. Disguised as a work of moral psychology—as a theory of moral sentiments alone—it is also a book about social organization, identity construction, normative standards, and the science of human behavior as a whole. Smith tells us that the two questions of moral philosophy are "Wherein does virtue consist?
The Theory of Moral Sentiments follows this plan, although Smith tackles the second question first, focusing on moral psychology long before he addresses the normative question of moral standards. For Smith, the core of moral learning and deliberation—the key to the development of identity itself—is social unity, and social unity is enabled through sympathy. The term "sympathy" is Hume's, but Smith's friend gives little indication as to how it was supposed to work or as to its limits.
In contrast, Smith addresses the problem head on, devoting the first sixty-six pages of TMS to illuminating its workings and most of the next two hundred elaborating on its nuances. The last part of the book part VII, "Of Systems of Moral Philosophy" is the most distanced from this topic, addressing the history of ethics but, again, only for slightly less than sixty pages. It is noteworthy that while modern writers almost always place the "literature review" in the beginning of their books, Smith feels that a historical discussion of ethics is only possible after the work on moral psychology is complete.
This is likely because Smith wanted to establish the principles of human behavior first so that he could evaluate moral theory in the light of what had been posited. It is also Stoic in its account of nature and self-command. The first sentence quoted above is a first principle—individuals are not egoistic—and all the rest of the book follows from this assertion.
And, as with all first principles, while Smith "assumes" the possibility of other-oriented behavior, the rest of the book both derives from its truth and contributes to its believability. Smith's examples, anecdotes, and hypotheticals are all quite believable, and if one is to accept these as accurate depictions of the human experience, then one must also accept his starting point.
Human beings care for others, and altruism, or beneficence as he calls it, is possible.
What is sympathy , then? This is a matter of controversy. Scholars have regarded it as a faculty, a power, a process, and a feeling. What it is not, however, is a moral sense in the most literal meaning of the term. Sympathy is not a sixth capacity that can be grouped with the five senses. Smith, while influenced by Hutcheson, is openly critical of his teacher.
Sympathy is the foundation for moral deliberation, Smith argues, and Hutcheson's system has no room for it. For Smith, sympathy is more akin to modern empathy, the ability to relate to someone else's emotions because we have experienced similar feelings. While contemporary "sympathy" refers only to feeling bad for a person's suffering, Smith uses it to denote "fellow-feeling with any passion whatever" TMS I. It is how a "spectator In short, sympathy works as follows: individuals witness the actions and reactions of others.
When doing so, this spectator attempts to enter into the situation he or she observes and imagines what it is like to be the actor—the person being watched. Smith uses actor and agent interchangeably. Then, the spectator imagines what he or she would do as the actor. If the sentiments match up, if the imagined reaction is analogous to the observed reaction, then the spectator sympathizes with the original person. If the reactions are significantly different, then the spectator does not sympathize with the person.
In this context, then, sympathy is a form of moral approval and lack of sympathy indicates disapproval. Sympathy is rarely exact. Smith is explicit that the imagined sentiments are always less intense than the original, but they are nonetheless close enough to signify agreement. And, most important, mutual sympathy is pleasurable. By nature's design, people want to share fellow-feeling with one another and will therefore temper their actions so as to find common ground. This is further indication of the social nature of human beings; for Smith, isolation and moral disagreement is to be avoided.
It is also the mechanism that moderates behavior. Behavior modulation is how individuals learn to act with moral propriety and within social norms. According to The Theory of Moral Sentiments, mutual sympathy is the foundation for reward and punishment. Smith is insistent, though, that sympathy is not inspired by simply witnessing the emotions of others even though it "may seem to be transfused from one man to another, instantaneously, and antecedent to any knowledge of what excited them in the person principally concerned" TMS I.
Rather, the spectator gathers information about the cause of the emotions and about the person being watched. Only then does he or she ask, given the particular situation and the facts of this particular agent's life, whether the sentiments are appropriate. As Smith writes:. When I condole with you for the loss of your only son, in order to enter into your grief I do not consider what I, a person of such a character and profession, should suffer, if I had a son, and if that son was unfortunately to die: but I consider what I should suffer if I was really you, and I not only change circumstance with you, but I change persons and characters.
My grief, therefore, is entirely upon your own account, and not in the least upon my own. TMS VI. We can see here why the imagination is so important to Smith. Only through this faculty can a person enter into the perspective of another, and only through careful observation and consideration can someone learn all the necessary information relevant to judge moral action. We can also see why sympathy is, for Smith, not an egoistic faculty:. In order to produce this concord, as nature teaches the spectators to assume the circumstances of the person principally concerned, so she teaches this last in some measure to assume those of the spectators.
As they are continually placing themselves in his situation, and thence conceiving emotions similar to what he feels; so he is as constantly placing himself in theirs, and thence conceiving some degree of that coolness about his own fortune, with which he is sensible that they will view it. As they are constantly considering what they themselves would feel, if they actually were the sufferers, so he is as constantly led to imagine in what manner he would be affected if he was only one of the spectators of his own situation.
As their sympathy makes them look at it, in some measure, with his eyes, so his sympathy makes him look at it, in some measure, with theirs, especially when in their presence and acting under their observation: and as the reflected passion, which he thus conceives, is much weaker than the original one, it necessarily abates the violence of what he felt before he came into their presence, before he began to recollect in what manner they would be affected by it, and to view his situation in this candid and impartial light.
Contrary to the description put forth by the Adam Smith Problem, sympathy cannot be either altruistic or egoistic because the agents are too intertwined. One is constantly making the leap from one point of view to another, and happiness and pleasure are dependant on joint perspectives.
Individuals are only moral, and they only find their own happiness, from a shared standpoint. Egoism and altruism melt together for Smith to become a more nuanced and more social type of motivation that incorporates both self-interest and concern for others at the same time. Typical of Smith, the lengthy paragraph cited above leads to at least two further qualifications. The first is that, as Smith puts it, "we expect less sympathy from a common acquaintance than from a friend Because sympathy requires information about events and people, the more distance we have from those around us, the more difficult it is for us to sympathize with their more passionate emotions and vice versa.
Thus, Smith argues, we are to be "more tranquil" in front of acquaintances and strangers; it is unseemly to be openly emotional around those who don't know us. This will lead, eventually, to Smith's discussion of duty in part III—his account of why we act morally towards those with whom we have no connection whatsoever.
The second qualification is more complex and revolves around the last phrase in the paragraph: that one must observe actions in a "candid and impartial light. All sentiments would be modulated to an identical pitch and society would thereafter condemn only difference.
Smith recognizes, therefore, that there must be instances in which individuals reject community judgment. They do so via the creation of an imagined impartial spectator. Using the imagination, individuals who wish to judge their own actions create not just analogous emotions but an entire imaginary person who acts as observer and judge:. When I endeavour to examine my own conduct, when I endeavour to pass sentence upon it, and either to approve or condemn it, it is evident that, in all such cases, I divide myself, as it were, into two persons; and that I, the examiner and judge, represent a different character from that other I, the person whose conduct is examined into and judged of.
The first is the spectator, whose sentiments with regard to my own conduct I endeavour to enter into, by placing myself in his situation, and by considering how it would appear to me, when seen from that particular point of view. The second is the agent, the person whom I properly call myself, and of whose conduct, under the character of a spectator, I was endeavouring to form some opinion.
The first is the judge; the second the person judged of. But that the judge should, in every respect, be the same with the person judged of, is as impossible, as that the cause should, in every respect, be the same with the effect. The impartial spectator is the anthropomorphization of the calm and disinterested self that can be recovered with self control and self reflection. In today's world, someone might advise us to "take a deep breath and step back" from a given situation in order to reflect on our actions more dispassionately.
Smith is suggesting the same, although he is describing it in more detail and in conjunction with the larger ethical theory that helps us find conclusions once we do so. Individuals who wish to judge their own actions imaginatively split themselves into two different people and use this bifurcation as a substitute for community observation. Here we see the legacy of Shaftesbury's soliloquy. An actor who wishes to gauge his or her own behavior has to divide him or herself in the way that Shaftesbury describes, in the way that Hamlet becomes both poet and philosopher.
We are passionate about our own actions, and self-deception, according to Smith, is "the source of half the disorders of human life" TMS III. Self-division gives individuals the ability to see themselves candidly and impartially and leads us to better self-knowledge. We strive to see ourselves the way others see us, but we do so while retaining access to the privileged personal information that others might not have.
The community helps us see past our own biases, but when the community is limited by its own institutionalized bias or simply by lack of information, the impartial spectator can override this and allow an agent to find propriety in the face of a deformed moral system. In the contemporary world, racism and sexism are examples of insidious biases that prevent the community from "seeing" pain and injustice.
Smith too can be read as recognizing these prejudices, although he would not have recognized either the terms or the complicated discourses about them that have evolved since he wrote two and a half centuries ago. For example, he cites slavery as an instance of the injustice and ignorance of a community. He writes:. There is not a Negro from the coast of Africa who does not, in this respect, possess a degree of magnanimity which the soul of his sordid master is too often scarce capable of conceiving. Fortune never exerted more cruelly her empire over mankind, than when she subjected those nations of heroes to the refuse of the jails of Europe, to wretches who possess the virtues neither of the countries which they come from, nor of those which they go to, and whose levity, brutality, and baseness, so justly expose them to the contempt of the vanquished.
TMS V. Despite its corrective potential, impartiality has its limits. Smith does not imagine the impartial spectator to see from an Archimedean or God's eye point of view. Because the impartial spectator does not really exist—because it is created by an individual person's imagination—it is always subject to the limits of a person's knowledge. This means that judgment will always be imperfect and those moral mistakes that are so profoundly interwoven into society or a person's experience are the hardest to overcome. Change is slow and society is far from perfect.
There are two points, according to Smith, when we judge our own actions, before and after we act. As he writes, "Our views are apt to be very partial in both cases; but they are apt to be most partial when it is of most importance that they should be otherwise" TMS Neither of these points is independent of social influence.
How Adam Smith's economic philosophies apply in today's world - Marketplace
Knowledge is imperfect and individuals do the best they can. But all individuals are limited both by their own experiences and the natural inadequacies of the human mind. Smith's suggestion, then, is to have faith in the unfolding of nature, and in the principles that govern human activity—moral, social, economic, or otherwise. With this in mind, however, he cautions people against choosing the beauty of systems over the interest of people. Abstract philosophies and abstruse religions are not to take precedent over the evidence provided by experience, Smith argues.
Additionally, social engineering is doomed to fail. For women, the rate of poverty is particularly exacerbated by the pressure on their time. In general, time is one of the few luxuries the very poor have, but study after study has shown that women in poverty, who are responsible for all family comforts as well as any earnings they can make, have less of it. It is harder for females to get credit to expand businesses, to take the time to learn a new skill, or to spend extra hours improving their craft so as to be able to earn at a higher rate. The majority of the poorest countries in the world are in Africa.
That is not to say there is not diversity within the countries of that continent; countries like South Africa and Egypt have much lower rates of poverty than Angola and Ethiopia, for instance. Overall, African income levels have been dropping relative to the rest of the world, meaning that Africa as a whole is getting relatively poorer. Exacerbating the problem, saw a drought in northeast Africa that brought starvation to many in the region.
Why is Africa in such dire straits? Centuries of struggle over land ownership have meant that much useable land has been ruined or left unfarmed, while many countries with inadequate rainfall have never set up an infrastructure to irrigate. Further, African poverty is worsened by civil wars and inadequate governance that are the result of a continent re-imagined with artificial colonial borders and leaders.
Consider the example of Rwanda. There, two ethnic groups cohabited with their own system of hierarchy and management until Belgians took control of the country in and rigidly confined members of the population into two unequal ethnic groups. This ultimately led to a repressive government and genocide against Tutsis that left hundreds of thousands of Rwandans dead or living in diaspora U. Department of State c. The painful rebirth of a self-ruled Africa has meant many countries bear ongoing scars as they try to see their way toward the future World Poverty a.
As in Africa, Asia finds itself with disparity in the distribution of poverty, with Japan and South Korea holding much more wealth than India and Cambodia. In fact, most poverty is concentrated in South Asia.
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One of the most pressing causes of poverty in Asia is simply the pressure that the size of the population puts on its resources. According to the U. Department of State b. However, every part of Asia has felt the global recession, from the poorest countries whose aid packages were hit, to the more industrialized ones whose own industries slowed down. These factors make the poverty on the ground unlikely to improve any time soon World Poverty b. Poverty rates in some Latin American countries like Mexico have improved recently, in part due to investment in education.
But other countries like Paraguay and Peru continue to struggle. Although there is a large amount of foreign investment in this part of the world, it tends to be higher-risk speculative investment rather than the more stable long-term investment Europe often makes in Africa and Asia. The volatility of these investments means that the region has been unable to leverage them, especially when mixed with high interest rates for aid loans.
Further, internal political struggles, illegal drug trafficking, and corrupt governments have added to the pressure World Poverty c. Argentina is one nation that suffered from increasing debt load in the early s, as the country tried to fight hyperinflation by fixing the peso to the U. By , so much money was leaving the country that there was a financial panic, leading to riots and ultimately, the resignation of the president U.
The Problem With Inequality, According to Adam Smith
Department of State a. Most of us do not pay too much attention to where our favourite products are made. And certainly when you are shopping for a cheap T-shirt, you probably do not turn over the label, check who produced the item, and then research whether or not the company has fair labour practices. In fact it can be very difficult to discover where exactly the items we use everyday have come from. Nevertheless, the purchase of a T-shirt involves us in a series of social relationships that ties us to the lives and working conditions of people around the world.
On April 24, , the Rana Plaza building in Dhaka, Bangladesh, collapsed killing 1, garment workers. The workers at Rana Plaza were in fact making clothes for the Joe Fresh label—the signature popular Loblaw brand—when the building collapsed. But over the last two decades of globalization, Canadian consumers have become increasingly tied through popular retail chains to a complex network of outsourced garment production that stretches from China, through Southeast Asia, to Bangladesh and Sri Lanka.
The early s saw the economic opening of China when suddenly millions of workers were available to produce and manufacture consumer items for Westerners at a fraction of the cost of Western production. Manufacturing that used to take place in Canada moved overseas. Over the ensuing years, the Chinese began to outsource production to regions with even cheaper labour: Vietnam, Cambodia, Sri Lanka, and Bangladesh. The outsourcing was outsourced. The result is that when a store like Loblaw places an order, it usually works through agents who in turn source and negotiate the price of materials and production from competing locales around the globe.
Most of the T-shirts that we wear in Canada today begin their life in the cotton fields of arid west China, which owe their scale and efficiency to the collectivization projects of centralized state socialism. However, as the cost of Chinese labour has incrementally increased since the s, the Chinese have moved into the role of connecting Western retailers and designers with production centres elsewhere. In a global division of labour, if agents organize the sourcing, production chain and logistics, Western retailers can focus their skill and effort on retail marketing.
It was in this context that Bangladesh went from having a few dozen garment factories to several thousand. Unfortunately, although there are legal safety regulations and inspections in Bangladesh, the rapid expansion of the industry has exceeded the ability of underfunded state agencies to enforce them. The globalization of production makes it difficult to follow the links between the purchasing of a T-shirt in a Canadian store and the chain of agents, garment workers, shippers, and agricultural workers whose labour has gone into producing it and getting it to the store.
Our lives are tied to this chain each time we wear a T-shirt, yet the history of its production and the lives it has touched are more or less invisible to us. It becomes even more difficult to do something about the working conditions of those global workers when even the retail stores are uncertain about where the shirts come form. There is no international agency that can enforce compliance with safety or working standards. Why do you think worker safety standards and factory building inspections have to be imposed by government regulations rather than being simply an integral part of the production process?
Why does it seem normal that the issue of worker safety in garment factories is set up in this way? Why does this make it difficult to resolve or address the issue? The fair trade movement has pushed back against the hyper-exploitation of global workers and forced stores like Loblaw to try to address the unsafe conditions in garment factories like Rana Plaza. Organizations like the Better Factories Cambodia program inspect garment production regularly in Cambodia, enabling stores like Mountain Equipment Co-op to purchase reports on the factory chains it relies on.
After the Rana Plaza disaster, Loblaw signed an Accord of Fire and Building Safety in Bangladesh to try to ensure safety compliance of their suppliers.
Not surprisingly, the consequences of poverty are often also causes. The poor experience inadequate health care, limited education, and the inaccessibility of birth control. Those born into these conditions are incredibly challenged in their efforts to break out since these consequences of poverty are also causes of poverty, perpetuating a cycle of disadvantage. According to sociologists Neckerman and Torche in their analysis of global inequality studies, the consequences of poverty are many. They have divided the consequences into three areas. As mentioned above, poverty exists in a cycle where the consequences and causes are intertwined.
The second consequence of poverty is its effect on physical and mental health. Poor people face physical health challenges, including malnutrition and high infant mortality rates. Mental health is also detrimentally affected by the emotional stresses of poverty, with relative deprivation carrying the strongest effect. Again, as with the ongoing inequality, the effects of poverty on mental and physical health become more entrenched as time goes on.
Cross-nationally, crime rates are higher, particularly with violent crime, in countries with higher levels of income inequality Fajnzylber, Lederman, and Loayza While most of us are accustomed to thinking of slavery in terms of pre—Civil War America, modern-day slavery goes hand in hand with global inequality. In short, slavery refers to any time people are sold, treated as property, or forced to work for little or no pay. Just as in pre—Civil War America, these humans are at the mercy of their employers.
Chattel slavery , the form of slavery practised in the pre—Civil War American South, is when one person owns another as property. Child slavery, which may include child prostitution, is a form of chattel slavery. Debt bondage , or bonded labour, involves the poor pledging themselves as servants in exchange for the cost of basic necessities like transportation, room, and board.
In this scenario, people are paid less than they are charged for room and board. When travel is involved, people can arrive in debt for their travel expenses and be unable to work their way free, since their wages do not allow them to ever get ahead. The global watchdog group Anti-Slavery International recognizes other forms of slavery: human trafficking where people are moved away from their communities and forced to work against their will , child domestic work and child labour, and certain forms of servile marriage, in which women are little more than chattel slaves Anti-Slavery International As with any social issue, global or otherwise, there are a variety of theories that scholars develop to study the topic.
The two most widely applied perspectives on global stratification are modernization theory and dependency theory. According to modernization theory, low-income countries are affected by their lack of industrialization and can improve their global economic standing through:. Critics point out the inherent ethnocentric bias of this theory. It supposes all countries have the same resources and are capable of following the same path. There is no room within this theory for the possibility that industrialization and technology are not the best goals.
There is, of course, some basis for this assumption. Data show that core nations tend to have lower maternal and child mortality rates, longer lifespans, and less absolute poverty. It is also true that in the poorest countries, millions of people die from the lack of clean drinking water and sanitation facilities, which are benefits most of us take for granted.
At the same time, the issue is more complex than the numbers might suggest. Cultural equality, history, community, and local traditions are all at risk as modernization pushes into peripheral countries. The challenge, then, is to allow the benefits of modernization while maintaining a cultural sensitivity to what already exists. Dependency theory was created in part as a response to the Western-centric mindset of modernization theory. It states that global inequality is primarily caused by core nations or high-income nations exploiting semi-peripheral and peripheral nations or middle-income and low-income nations , creating a cycle of dependence Hendricks In the period of colonialism, core or metropolis nations created the conditions for the underdevelopment of peripheral or hinterland nations through a metropolis-hinterland relationship.
The resources of the hinterlands were shipped to the metropolises where they were converted into manufactured goods and shipped back for consumption in the hinterlands. The hinterlands were used as the source of cheap resources and were unable to develop competitive manufacturing sectors of their own. Dependency theory states that as long as peripheral nations are dependent on core nations for economic stimulus and access to a larger piece of the global economy, they will never achieve stable and consistent economic growth.
Further, the theory states that since core nations, as well as the World Bank, choose which countries to make loans to, and for what they will loan funds, they are creating highly segmented labour markets that are built to benefit the dominant market countries. At first glance, it seems this theory ignores the formerly low-income nations that are now considered middle-income nations and are on their way to becoming high-income nations and major players in the global economy, such as China.
But some dependency theorists would state that it is in the best interests of core nations to ensure the long-term usefulness of their peripheral and semi-peripheral partners. Globalization theory approaches global inequality by focusing less on the relationship between dependent and core nations, and more on the international flows of capital investment and disinvestment in an increasingly integrated world market.
Since the s, capital accumulation has taken place less and less in the context of national economies. Rather, as we saw in the example of the garment industry, capital circulates on a global scale, leading to a global reordering of inequalities both between nations and within nations. The production, distribution, and consumption of goods and services are administratively and technologically integrated on a worldwide basis. Effectively, we no longer live and act in the self-enclosed spaces of national states. According to globalization theory, the outcome of the globalization project has been the redistribution of wealth and poverty on a global scale.
The anti-globalization movement has emerged as a counter-movement to define an alternative, non-corporate global project based on environmental sustainability, food sovereignty, labour rights, and democratic accountability. How might a symbolic interactionist approach this topic? Chang, provides this opportunity. Chang follows two young women Min and Chunming who are employed at a handbag plant. They help manufacture coveted purses and bags for the global market. As part of the growing population of young people who are leaving behind the homesteads and farms of rural China, these female factory workers are ready to enter the urban fray and pursue an income much higher than they could have earned back home.
As a symbolic interactionist would do, Chang examines the daily lives and interactions of Min and Chunming—their workplace friendships, family relations, gadgets, and goods—in this evolving global space where young women can leave tradition behind and fashion their own futures. What she discovers is that the women are definitely subject to conditions of hyper-exploitation, but are also disembedded from the rural, Confucian, traditional culture in a manner that provides them with unprecedented personal freedoms.
Life for the women factory workers in Dongguan is an adventure, compared to their fate in rural village life, but one characterized by gruelling work, insecurity, isolation, and loneliness. Global Stratification and Classification Stratification refers to the gaps in resources both between nations and within nations. Researchers try to understand global inequality by classifying it according to factors such as how industrialized a nation is, whether it serves as a means of production or as an owner, and what income it produces.
Poverty has numerous negative consequences, from increased crime rates to a detrimental impact on physical and mental health. Theoretical Perspectives on Global Stratification Modernization theory, dependency theory, and globalization theory are three of the most common lenses sociologists use when looking at the issues of global inequality. Modernization theory posits that countries go through evolutionary stages and that industrialization and improved technology are the keys to forward movement.
Dependency theory sees modernization theory as Eurocentric and patronizing. With this theory, global inequality is the result of core nations creating a cycle of dependence by exploiting resources and labour in peripheral and semi-peripheral countries. Globalization theory argues that the division between the wealthy and the poor is now organized in the context of a single, integrated global economy rather than between core and peripheral nations. Global Stratification and Classification 1.
In the past, Canada manufactured clothes. Many clothing corporations have shut down their Canadian factories and relocated to China. Global Wealth and Poverty 6. To take advantage of opportunities for trade with different groups and increase the size of economic transactions, however, cultural ties are not enough. There is need for greater information about trading partners, and for institutions which ensure agreements on the details of exchange and compliance to the agreed conditions. These take the form of contracts, codes of conduct, standardized weights and measures, disclosure agreements, and enforcement through courts and policing.
Where transaction costs are small, the private enforcement of contracts may still be preferred. But as economic relations develop and become increasingly impersonal, the role of a third party to enforce compliance to rules is increasingly necessary Shirley, , p. Such institutions increase the security that the risk of incurring in an economic transaction is matched by the full appropriation of its eventual benefits. This includes the presence of individual private property rights. If property is protected individuals are more willing to invest and to incur sunk costs.
Recounting the land-ownership system in Ghana, Pande and Udry are able to show that where individual perception of security of land tenure is low, investment in the land is significantly reduced, and output consequently drops. In fact, in the few cases in which land is obtained through commercial transactions as opposed to the traditional informal system of land redistribution , there ceases to be any difference in levels of investment because security of tenure is assured.
This increases output and thus is conducive to economic development. The protection of property rights requires an expanded role for state authority. Individuals and groups sacrifice a degree of freedom in order to ensure state protection; they accept levies and taxes to cover policing expenses, and state monopoly over the use of force for common security Bates, , p. However, there is a risk that states which have the power to enforce property rights may use that power to expropriate property too. Instead of reducing risk of economic transactions, this increases it.
Thus property rights are by no means sufficient to spur economic growth, and must be balanced by institutions which limit the extractive capacity of state power. These typically involve independent parliaments and judiciaries. Democratic institutions of political representation strongly contribute to this process Rodrik, Unequal institutions strongly limit development by reducing the capacity of individuals to access resources, expand production and increase their incomes.
A comparative analysis of development trajectories of countries indicates that institutions which benefit elites and allow their appropriation of resources and products have perpetuated underdevelopment. Countries which have undergone colonial domination tend to be plagued by such extractive institutions. These have outlived the gaining of independence on behalf of these countries, and their control has largely been taken over by local elites. There are countless examples of societal outcomes the cause of which can be traced to institutional arrangements of many decades before. The unequal landownership system in Latin America latifundios has been indicated a fundamental cause of its underdevelopment.
There is evidence that it limits the development of greater rural employment and higher rural incomes World Bank, , ch 6. ECLA, the Economic Commission for Latin America, has repeatedly flagged the importance of land reform in the process of poverty-reducing agriculture and rural development. A report by the United Nations Food and Agriculture Organization stresses that this is particularly urgent as population growth threatens to increase income inequalities, and technological developments in agriculture may serve the landowner elites to further consolidate their grip on land and agriculture, thus perpetuating the process of path dependency in the formation of institutions UNFAO, ; see also Myrdal, Greater equality and functional economic institutions are also seen as the cause for the successful development of Vietnam compared to a similar country as Nicaragua, where high inequality has concentrated power in the hands of a restricted elite, and governments have failed to adequately invest in infrastructure and public welfare.
Similarly, institutional capacity to exploit domestic primary resources is indicated as the key to the success of Botswana and Mauritius in comparison to other developing countries for which primary resources have turned into a curse, i. The outcomes of institutions have effects which lie deep in the socio-economic fabric of societies. Banerjee and Duflo recount the finding by Abhijit and Lakshmi Iyer that in India the coexistence of two systems of land-revenue collection under the British colonization caused very different outcomes; under one system, the landlord was responsible for collecting taxes, and this strengthened his role, while under the other farmers themselves were responsible for the taxes.
The regions where the second system was dominant, years later with the tax system long gone exhibit higher agricultural yield, more schools and more hospitals, due to the development of more horizontal and cooperative social relationships among the inhabitants. Institutions which are conducive to development ensure greater self-expression, allow the free flow of information and encourage the formation of associations and clubs. These form prosperous social relationships, which are conducive to greater economic interaction by increasing levels of trust and wider availability of information Putnam, They allow greater sharing of resources through democratic institutions and the use of the state to reduce the risk attached to economic activity Bardhan, , p.
The welfare state is an example of an institution which pools resources to limit the negative effects of business cycles on incomes and unemployment. Institutions conducive to development pool resources to provide the investments in education, health and infrastructure which lie at the basis of economic interaction and are necessary and complementary to private investment. Informal institutions lie at the basis of an economy.