5—
The Historical Background: Adam Smith and the Industrial Revolution^[*]

I

An early version of this paper focused on the dispute, if one may call it that, between historians of economic thought who sometimes seek to demonstrate that Adam Smith was fully aware of the industrial revolution taking place around him as he wrote the Wealth of Nations , and economic historians who think he was not. It is true, as Samuel Johnson put it, that "in lapidary inscriptions, a man is not upon oath" and piety demands that the guest of honour be given the benefit of the doubt. None the less, I propose to dismiss this question quickly, with an open-and-shut verdict for the economic historians.

It is first necessary to establish that Adam Smith could have known, or should have known, about the industrial revolution. The timing of the industrial revolution is not fully agreed. Rostow, for example, puts "take-off" in 1783 which is too late for a book published in 1776, and even, allowing for publication lag, for the new Chapter VIII of Book IV and the new material of Chapter I of Book V which appeared in the third edition of 1783. But neither the Wealth of Nations nor the Industrial Revolution had production functions with point-input/point-output. The former, as we shall see, was 25 years in the writing, and the

[*] Published in Thomas Wilson and Andrew S. Skinner, eds, The Market and the State: Essays in Honour of Adam Smith (Oxford: Clarendon Press, 1976), presented at the Bicentennial Celebration in Glasgow of the publication of Smith's The Wealth of Nations . I am indebted for ideas, references, corrections and comments to Mark Blaug, Kenneth Carpenter, Ronald Coase, Larry Neal and Charles Staley.

timing and indicator(s) of the industrial revolution varies among observers, as Charles and Richard Tilly indicate in the following table:^[1]

Ashton notes that for those who like to be precise in such matters the lighting of the first furnace at the Carron iron works in 1760 may serve to mark the beginning of the industrial revolution in Scotland.^[2] Technology change turned sharply upward in the 1760s. The number of patents, which had seldom been a dozen a year prior to 1760, rose to 31 in 1766 and 36 in 1769, the year in which James Watt took out his patent on the steam engine and Arkwright his on the waterframe.^[3] Halévy notes that all the important inventions were crowded into the decade from 1766 to 1775.^[4]

Assume for the sake of argument that the industrial revolution was in the making from 1760 to 1782. These are roughly the dates of the Wealth of Nations . Dugald Stewart held that its fundamental principles go back to Adam Smith's lectures delivered in Glasgow in 1752–3, in his first year as professor of moral philosophy. W.R. Scott claims that his Edinburgh period from 1748 to 1751 was of the greatest importance for the central principle of his system, and that by 1749 at the latest he had begun to apply the idea of natural liberty — which emerged directly from the Naturalism of the 18th century — to commerce and industry. The lecture of 1755 at the Club dominated by Andrew Cochrane, provost and merchant, contained an important early statement of his ideas. The manuscript of about 1763 discovered by Scott contains a well worked-out version of the opening chapters of Book I on the division of labour, most of it preserved in the final version published 13 years later, but with one alteration in illustration significant for our purpose.^[5] In the 13 years between this draft and 1776, Smith spent two years in France, six years at Kirkcaldy in Scotland, and four years in London, the last ten writing, finishing, and publishing the book, as well as, at Kirkcaldy, in studying botany and some other sciences. Writing to Andreas Holt in October 1780, Smith said:

My own life has been extremely uniform. Upon my return to Great Britain, I retired to a small town in Scotland in the place of my nativity, where I

continued to live for six years in great tranquility and almost complete retirement.^[6]

Scott makes clear that Smith's technique of writing with a closely reasoned argument made revision difficult, as the text would have to be altered for a considerable distance.^[7] It may well be true, as Viner says, that "Smith was a keen observer of his surroundings and used skilfully what he saw to illustrate his general argument" — though Viner, puzzled by his unawareness of the bondage of Scottish colliers and salters and by the absence of references to the general economic state of the Highlands, excuses his failure to respond to his immediate Scottish background by saying his loyalties were largely to a wider Britain.^[8] But it is surely going too far to say with Max Lerner in his introduction to the Modern Library edition:

Smith kept his eyes and ears open . . . Here was something that gave order and meaning to the newly emerged world of commerce and the newly emerging world of industry . . . Smith took ten more years. He could not be hurried in his task. He had to read and observe further. He poked his nose into old books and new factories.^[9]

The last sentence is half right.

The text of the Wealth of Nations supports Smith on "great tranquility and almost complete retirement" against Viner and Lerner on contemporaneous illustrations. There is virtually no mention of cotton textiles, only one reference to Manchester in a list of cities, nothing on pottery, nothing on new methods of producing beer. Canals are dealt with under public works, but illustrated by the canal of Languedoc, finished in 1681, rather than by the Bridgewater canal of 1761, which initiated the spate of canal building and improvement in Britain culminating in the canal mania of the 1790s. Turnpikes are referred to without notice of the fact that travel times were falling rapidly: the first stagecoach from Birmingham to London in 1731 took 2 1/2 days; by 1776 the time had been reduced to 19 hours.

A historian of economic thought argues ingeniously that Smith was "fully aware" of the technical change about him, citing, for example, his text of the use of coal and wood as fuel, and the use of coal in iron and all other metals.^[10] But Smith does not discuss the spread of coal in industrial use. Coal is mentioned to illustrate points about rent^[11] or consumer taxes,^[12] primarily about space heating. From a discussion of producing iron with charcoal in the United States where wood is abundant^[13] and a mention of iron in a list — "In some manufactures, besides, coal is a necessary instrument of trade; as in those of glass, iron and all other metals" (825–6; V. ii. k. 12) — I find it difficult to infer that Smith had a full appreciation of Darby's contribution in substituting

coke for charcoal. Nor is it credible on the basis of the fact that Smith and Watt were acquainted, even friends, and had close friends in common — Dr Joseph Black, the chemist and Dr John Roebuck, an owner of the Carron Iron Works — to hypothesize a conversation in which Watt explained to Smith the machine-operated devices of the Soho plant of Boulton and Watt.^[14] There is no evidence that Watt and Smith met after Smith left Glasgow in 1763, and the evidence for their friendship in Smith's Glasgow period is slight, resting largely on Smiles's Lives of Boulton and Watt , unsupported by anything in the surviving papers of Watt or Smith.^[15] The minutes of Glasgow University do record that Smith was the chairman of a committee in 1762 to get back from Watt, and from the University printer Foulis, some of their considerable number of rooms.^[16] To go from these contacts to a suppositious post-1768 conversation is a heroic leap.

Moreover, Smith's analysis is static. Manufactures using coal were "confined principally to the coal countries; other parts of the country, on account of the high price of this necessary article, not being able to work so cheap" (825; V. ii. k. 12). He recognized the importance of transport costs in the delivered price of coal. What he failed to see was that the high price of coal away from the mines provided a strong incentive to reduce transport costs and to improve efficiency in coal consumption through invention, as in the Watt steam engine. In 1771 James Watt was working to install his new machines in Cornish copper mines where failures were being recorded because of the high price of coal and the inefficiency of the Newcomen engine.^[17]

It is unnecessary to labour the point. The Wealth of Nations was the work of a literary economist, like some of us, who drew his examples from books, not from the world around him. The steam engine which replaced the plough and grain mills to illustrate the third source of improvement from the division of labour — invention — between the 1763 and the 1776 versions of WN I. i was a Newcomen engine, not a separate-condenser Watt, and the story of the invention is said by Cannan to be mythical and drawn from a book published in 1744 (WN 9–10). Most of the books Smith relies on, moreover, are fairly old, published in the first quarter of the eighteenth century, and the bulk of his dated illustrations relate to this period as well, e.g. the detailed discussion on public debt in WN V. iii (865–7, 868–9 and 874–5 §§ 13–25, 27–30, 42–6). A detailed and up-to-the-minute discussion in the 3rd edition of 1783 concerns not industrial output but the impact of the herring bounty on the catch (485ff.; IV. v. a. 28–35 and Appendix I). Though it be heretical to say so, when he does go into the real world, he occasionally makes a slip. Smith believed, for example, that higher wages were paid in Birmingham than Sheffield because the former

produced goods based on "fashion and fancy", rather than the latter's "use or necessity".^[18] Birmingham goods are "continuously changing and seldom last long enough to be considered old established manufactures". This implies that the higher wages are required because of the risks of unemployment, whereas Birmingham workers were paid more because new articles in the "toy trade" — small metal articles, especially buckles and buttons — called for workmen with a capacity to adapt to new tasks, and to a continuous improvement in techniques.^[19]

I see no need to make the case that Adam Smith had a thorough understanding of the industrial revolution, and this for two reasons. In the first place, much of the substance of what he wrote was derivative; the division of labour goes back to Henry Martin's Considerations on the East-India Trade of 1701, and can be found worked out complete with references to pins in Carl's Traité de la Richesse des Princes et de leurs états et des moyens simples et naturels of 1722. Indeed, a powerful case has been made lately that much of the inspiration for Smith's emphasis on the division of labour came from Plato, rather than immediately earlier sources like the Encyclopédie , Harris, Locke, Mun or Mandeville (a list which omits Martin and Carl). Strong parallels are drawn between illustrations which Plato puts in the mouth of Socrates, and those used by Smith, along with the observation that the Smith library contained three sets of Plato's complete works.^[20] Like Shakespeare who borrowed his plays, his originality was in how vividly and graphically he expressed ideas which were common currency.

Secondly, few are given to recognize the beginnings of great movements at their birth. Smith wrote throughout of "improvements" in an age, as Samuel Johnson said, when the "world was running mad after innovation". A number of the inventors and entrepreneurs had large visions. In his well-known letter to Watt in 1769, Boulton, in reply to the Roebuck suggestion that he buy a licence to make the Watt steam engine for Warwick, Staffordshire and Derby, said that he wanted to make it for the whole world.^[21] To James Boswell in 1776 he stated "I sell here, Sir, what the world wants to have, Power".^[22] Similar exalted commercial ambition can be found in Josiah Wedgwood, who wrote to his partner, Thomas Bentley, in November 1768: "I have lately had a vision by night of some Vases, Tablets, &c with which Articles we shall certainly serve the Whole World ".^[23] On a more technical level, note Watt's interest in 1769 in a patent for drawing a chaise by steam.^[24] The idea had been advanced by his Glasgow colleague in 1759.^[25] Boulton and Dr William Small had many conversations on applying steam power to canal boats.^[26]

The men associated with nascent industry were many of them caught up in the changes around them. Watt and Boulton visited the Bridge-

water canal before undertaking the surveying of canal sites in Scotland in the former case, and the pushing for the Grand Trunk in the latter.^[27] Thomas Bentley "participated in the new spirit. Canal-navigation, moss draining, new materials for manufacturers, improved processes for industry, new inventions of all kinds arrested and retained his attention."^[28] The "spirit for enterprise and improvement in the arts" of (medical) Dr John Roebuck, friend of Adam Smith and patron of James Watt, inventor of the lead chamber method of making sulphuric acid, entrepreneur of coal mines and the Carron iron works, "was well known."^[29] Even Edmund Burke, as Koebner reminds us, in 1769 collected instances of the energies displayed in British manufactures, and praised the "spirited, inventive, and enterprising traders of Manchester."^[30] From one viewpoint,

It was an age in which economic and industrial facts loomed large; they advanced new claims and offered new stimulus . . . a vast change had come over the general mind; the objects of knowledge, study and pursuit were seen in altered perspective and acquired altered values.^[31]

Adam Smith, as just noted, wrote continuously of improvements but without suggesting he was aware of their details, on the one hand, or their collective import, on the other. The reason is surely contained in a statement by a colleague of mine at the Massachusetts Institute of Technology, a metallurgist, Cyril Stanley Smith, a statement which both sums up the nature of the industrial revolution and reveals how Adam Smith could have ignored it:

These and hundreds more materials and uses grew symbiotically through history, in a manner analogous to the S-curve of a phase transformation of the materials themselves. There was a stage, invisible except in retrospect, wherein fluctuations from the status-quo , involving only small localised distortion, began to interact and consolidate into a new structure; this nucleus then grew in a more or less constant environment at an increasing rate because of the increasing interfacial opportunity, until finally its growth was slowed and stopped by depletion of material necessary for growth, or by the growing counter-pressure of other aspects of the environment. Any change in conditions (thermo-dynamic = social) may provide an opportunity for a new phase. We all know how the superposition of many small sequential S-curves themselves tend to add up to the giant S-curve of that new and larger structure we call civilisation . . . Because at any one time there are many overlapping competing sub-systems at different stages of maturity but each continually changing the environment of the others, it is often hard to see what is going on. Moreover, nucleation must in principle be invisible, for the germs of the future take their validity only from and in a larger system that has yet to exist. They are at first indistinguishable from mere foolish fluctuations destined to be erased. They begin in opposition to their en-

vironment, but on reaching maturity they form the new environment by the balance of their multiple interactions. This change of scale and interface with time, of radical misfit turning into conservative interlock, is the essence of history of anything whatever, material, intellectual or social.^[32]

Adam Smith has a superb record for forecasting in his remarks on the subject of another revolution, that which started in the same year as the Wealth of Nations appeared, unless you take the parochial view of my fellow-citizens of Massachusetts that it started a year and a quarter earlier in the skirmishes at Lexington and Concord. Smith was, moreover, prescient in observing that after freeing the colonies

Great Britain would not only be immediately free from the whole annual expence of the peace establishment of the colonies, but might settle with them such a treaty of commerce as would eventually secure to her a free trade, more advantageous to the great body of the people, though less so the merchants, than the monopoly which she at present enjoys.^[33]

If one takes 1782 or 1783 as the date of ignition of the industrial revolution, the revolution Smith did foresee touched off the one he did not.^[34]

II

The industrial revolution is a well-squeezed orange, as Ashton has said, and my friend and former student, Charles Staley, on hearing that I was to write this essay, drew my attention to a quotation from an article on human evolution which he finds applicable to studies of Adam Smith:

Human paleontology shares a peculiar trait with such disparate subjects as theology and extra-terrestrial biology. It contains more practitioners than objects for study. This abundance of specialists has assumed the careful scrutiny of every bump on every bone.^[35]

Despite the danger of strongly diminishing returns, however, it may be appropriate to touch on three aspects of the industrial revolution which currently interest me: the overtaking of Holland by Britain; the role of beauty in technical change; and Stephen Marglin's recent suggestion that the division of labour was practised under capitalism less for efficiency than for lowering the return to labour.

In a curious passage, Adam Smith claimed that England and France consisted in great measure of proprietors and cultivators, whereas Holland and Hamburg were composed chiefly of merchants, artificers, and manufacturers (632; IV. ix. 13). Hollander states that this remark is meant comparatively, but the basis for such a judgment is not evident.^[36] Holland, Smith further thought, was a richer country than England in

proportion to the extent of its territory and the number of its people (91; I. ix. 10). In a later passage he states that Holland is by far the richest country in Europe, and England perhaps the second richest (354; II. v. 35), which is not completely congruent with a still later passage in which he states that there is no country in Europe, Holland not excepted, whose law is, on the whole, more favourable to the interests of commerce and manufactures, which have been making more rapid progress than agriculture (393; III. iv. 20). Still later, Smith discusses the ruin of manufactures in Holland which is ascribed to high wages (826–7, 857; V. ii. k. 14, 79). This last view of Dutch industry is accepted by modern scholars.^[37]

The picture could have been aided by a better historical sense. Holland was the richest country in Europe in 1675, after which its commerce and manufactures decayed and those of Britain advanced rapidly. By 1730, or at the latest 1750, according to modern interpretations, income per capita in Britain had outstripped that in Holland. A successful protectionist policy in Britain had stimulated linen production, especially in Ireland and in Scotland after union in 1707. Dutch potters moved to London to produce their Delftware there to exploit a patent taken out in 1671. Haarlem lost out in bleaching in 1730. Herring fishing and whaling declined. The staple trade of Amsterdam, moreover, had been replaced by direct exchanges of English woolens for German linen and Spanish and Portuguese wine and treasure, without the need for shipment through the intermediary of Amsterdam. Adam Smith was mistaken in relation to stapling. He thought that commerce or at least the carrying trade derived from opulence rather than led to it (354; II. v. 35) and stated elsewhere that merchants exchanging Königsberg corn for Portuguese wine brought both to Amsterdam and incurred the double charge for loading and unloading because they felt uneasy separated from their capital (421–2; IV. ii. 6), thus ignoring the stapling function of grading, packing, storing, and the economies of scale of broader markets.

It is odd that Smith should have thought Britain behind Holland in manufactures in the late 1760s. Josiah Tucker in 1757 wrote:

Few countries equal, perhaps none excell the English in the Numbers and Contrivance of their Machines to abridge Labour. Indeed the Dutch are superior to them in the Use and Application of Wind-Mills for sawing Timber, expressing Oil, making Paper, and the like. But in regard to Mines and Metals of all sorts, the English are uncommonly dextrous in their contrivance of the mechanic powers . . . Slitting Mills, Flatting Mills, Water Wheels, Steam Engines . . . Yet all these, curious as they may seem are little more than preparation or introduction for further operations . . . at Birmingham, Wolverhampton, Sheffield and other Manufacturing Places,

almost every Master Manufacturer hath a new Invention of his own, and is daily improving on those of others.^[38]

There is the view that it was not the decline of Holland so much as the fact that after 1648 she stood still and let other countries overtake her,^[39] or that the Dutch economy did not decline absolutely until 1780.^[40] This overlooks the deterioration of Leiden, Haarlem, Delft, and Saandam in shipbuilding, and the loss of the Dutch monopoly in shipping and in the herring catch.

Most of all, however, Smith seems not to have appreciated how much of the advances in commerce and industry in Britain were the result of intervention in the economic process as opposed to the simple and obvious system of natural liberty. The Dutch monopoly in commerce was invaded by the Navigation Acts of the seventeenth century, which Smith more or less approved of on the ground of national defence, though in this respect one view contends that he was being ironic.^[41] Smith explicitly objects to the monopoly of the carrying trade with the colonies and insists that Britain was a great nation in trade before the Navigation Acts (563; IV. vii. c. 23). This seems to overlook the basis for Glasgow's prosperity with the monopoly of tobacco trade with Maryland and Virginia; after its loss in 1776 Glasgow fell on hard times. And it especially ignores the position in textiles, where commercial policy was highly effective. It may well be that responsiveness of the economy is more important than the nature of the stimulus; under certain conditions, industry will be spurred either by an increase in a tariff or by a decrease. But the case of cotton textiles is instructive.

At the end of the seventeenth century Indian calicos were beginning to eat into the market for woolens, and the latter interests persuaded Parliament in 1700 to prohibit the import of printed calicos. In the interest of the printing industry, plain muslins were permitted entry under a heavy duty, but as these grew in volume, the woolen and linen interests agitated for an excise tax on calicos printed, stained, painted or dyed, which affected local finishing. This was levied at the rate of 3d. per yard in 1712, and raised to 6d. in 1714. Demand kept rising, and such was the distress among woolen producers that in 1720 an act was passed prohibiting the use or wear of all printed or dyed calicos except muslin, neckcloths and fustians. None of these measures was effective. In 1736 the manufacture of calico was permitted with a linen warp. Walpole's tariff reforms of 1721–42 abolished duties on exports of manufactured goods, and on imports of raw materials, stimulating textile manufacturing of all kinds, though the import of raw cotton did not pick up until after 1748, well after Kay's 1738 invention of the flying shuttle, which could not help, given the yarn bottleneck. When this was broken by Arkwright's waterframe in 1769 and Hargreaves's spinning

jenny in 1770, cotton was used first for stockings and then in 1773 for cloth. Arkwright petitioned Parliament to remove the duties, and by 1774 every kind of printed, stained and dyed stuffs made wholly from cotton became lawful.^[42] As noted in the 1783 edition of the Wealth of Nations , this last year also saw the enactment of a prohibition on the export of utensils used in the cotton, linen, woolen and silk manufacture (624; IV. viii. 43).

Commercial policy equally played a role in the development of linen manufacture in Ireland and Scotland, and in iron.

Policy, as I have noted, was probably less important than the response to it. In the 1820s, Spitalfields would respond positively to a reduction in tariffs as Manchester responded positively to a reduction in imports. The difference between silk and cotton lay in the elasticity of the supply of raw material, low in silk, high (after 1790) in cotton. Entrepreneurs were ready to be stimulated by lower prices or higher, of outputs or inputs.

III

Smith's distinction between fashion and fancy and use or necessity, referred to earlier, had its echo in the division of Josiah Wedgwood's manufactures between Wedgwood and (Thomas) Wedgwood, which produced useful wares at Burslem, and the new plant at Etruria, established for producing ornamental ware by Wedgwood and Bentley.^[43] It survives today in Galbraith's distinction between necessities and those goods forced on passive consumers by advertising, and in the lines drawn by developing countries between things they need and those like Coca-Cola and breakfast foods which ignorant consumers waste their substance on. At every epoch it is of doubtful validity.

The usual view is that necessity is the mother of invention, or invention the mother of necessity, or both. Or that inventions leapfrog through disproportionalities, what Hirschman calls unbalanced growth, with expansion at one stage of production putting pressure on improved efficiency upstream in the production of inputs, and downstream in the consumption of its outputs. None of this can be denied. But Cyril Smith makes the point that a very large number of inventions, and particularly the improvement of materials, derive from the attempt to make goods more pleasing — softer, whiter, more brightly coloured, more beautiful,^[44] better tasting. A great deal of the effort of merchants and manufacturers is in improving quality, and in standardizing it. Price is important, but so are quality and the assurance of quality which comes from standardization, a point largely missed initially in the Russian revolution and in economic development in the less developed countries, and one which

was inherent in capitalist organization under both putting out and the factory system.

In another paper, I make the distinction between the "gains-from-trade" merchant, who largely buys goods where they are cheap, and sells them where they are dear, and the "value-added" merchant, who concerns himself especially with extending the market by insisting that the goods be made better so as to have greater appeal. These are ideal types, of course, since the purest of gains-from-trade merchants, buying spice, silk, or china in the East and selling it in London, will repackage and sort the goods to add some value; at the other extreme, the value-added merchant must still buy cheap and sell dear. The distinction is not quite identical with Adam Smith's separation of the speculative merchant, who exercises no one regular, established, or well-known branch of business, who can sometimes accumulate a considerable fortune by two or three successful speculations, and the slow accumulator in a single industry who seldom makes a great fortune but in consequence of a long life of industry, frugality and attention (113–14; I. x. b. 38). The gains-from-trade merchant leaves goods much as they are, save for sorting, perhaps curing, packing, refining, and the like, relatively simple functions, while the value-added merchant puts pressure on his suppliers to make goods more efficient for the task in hand, and in the cases of textiles, glass, china, and 'toys' more attractive, or cheaper for the same degree of attraction. The chemical industry grew partly from pure science, the investigations of Priestly and Lavoisier which fall within the period of the industrial revolution, and also from pressure of industry to find cheaper methods of bleaching and dyeing, not for "use or necessity" but for "fashion and fancy".

Adam Smith frequently failed to distinguish between commerce and industry, treating them almost as one word, like "damn Yankee", and for the purpose of quality improvement and standardization, the differences are minimal. The merchant often retained the finishing stages of textile manufacture in his own hands, or subcontracted them out under rigorous supervision. Such was the case in Manchester,^[45] Leeds,^[46] Beauvais,^[47] Le Mans,^[48] Barmen and Elberfeld.^[49] In toy-making there was a feverish search for novelties, and designing advances was an important function of the industry.^[50] Wedgwood wrote to Bentley in 1770: "I am fully persuaded that the farther we proceed in it [ornament] the richer crop we shall reap of Fame and Profit ."^[51] The hunt for synthetic dyes in the mid-nineteenth century which ushered in the organic chemistry revolution had much the same spur.

It is of particular interest that import substitution and the search for economical beauty go hand in hand. The industrial revolution can be said to have resulted in large measure from the search for substitutes for cottons and china from the East. Calicos in Britain have been dis-

cussed. "Siamoises" were a cotton cloth in France devised to imitate the stuffs worn by the wife of the Ambassador of Siam when she was presented to the court of Louis XIV in 1684.^[52] China ware was brought from the Orient by the early East India companies at the turn of the sixteenth to seventeenth centuries. Meissen ware in the first decade of the eighteenth century and Sèvres china in the 1750s were early responses. They were both supported by courts, and did not need to meet a market test. Delft provided a less elegant substitute for the earthenware of the ordinary household until Wedgwood took over,^[53] in the same way as chemically bleached, dyed and printed cotton took over from unbleached or crudely bleached, and undyed or crudely dyed linens and woolens. Especially in the hot climates of the Mediterranean and Latin America, lighter and brighter were better.

Standardization means value-added in various ways. To the modern consumer, homespun, handcrafted, tailormade is superior to machine-produced goods, but that is because they are made to superior specifications. When all goods were homemade, the lack of standardization was a disability, whether in stacking plates which exerted unequal pressure on one another, and thus broke^[54] or the cloth that did not meet specifications and was returned, thus increasing the need for investment in working capital.

One form of standardization is attention to delivery dates. In the eighteenth century this did not seem pressing, but infrequent sailings of ships, the fleet leaving Bristol for Newfoundland once a year, for example, made prompt delivery a capital-saving virtue, as did marketing through semi-annual or annual fairs.

The spectacular inventions in steam, waterframe, spinning jenny, coke, puddling and the like occupy front and centre of the stage of the industrial revolution. Firms like Boulton and Watt capable of contemplating steam-chaises and moving canal boats by steam engine in 1759 and 1770 capture the imagination. But the steady improvement of goods in quality and standardization was a vital part of the action. Search for quality frequently led to breakthroughs such as Wedgwood's creamware, and jaspar, which leads Cyril Smith to hold Wedgwood's science-based, market-oriented industry as a nucleus of English economic growth as much as the better-known contributions of Darby and Cort to iron manufacture or of Watt to power production.^[55]

IV

Adam Smith's contribution which is most clearly related to the industrial revolution is doubtless the opening discussion in Book I,

Chapters i–iii. This has recently been praised and damned: praised by Lord Kaldor who asserts that economics went wrong immediately in the middle of Chapter iv when Smith abandoned his examination of the relationship between the division of labour and the extent of the market and moved off into money, the theory of value and the distribution of income, what most think his central contribution to our subject but Kaldor views as irrelevant;^[56] damned by Stephen A. Marglin, a radical critic, who contends that the division of labour has nothing to do with efficiency and everything to do with the expropriation of income from the worker by the capitalist.^[57] I leave the quarrel with Kaldor to others concerned with resource allocation and income distribution, and address Marglin's proposition. It is, I believe, of interest today because it makes a strong appeal to young people and to non-economist Marxists, such as Johann Galtung, who believe that all dependence, even interdependence, is exploitation.^[58] Hierarchical organizations of all kinds are under attack, and the radical faith suggests that foremen and supervisors in a factory should be chosen arbitrarily, by lot, by election, rather than by competitive means, and paid the same as those whom they supervise.

Marglin's argument proceeds along the same lines as Smith's, as he discusses the pin factory and the three sources of improvement: dexterity, the saving of waiting time between tasks, and the devising of inventions which abridge labour by workers concentrating on a single task. The last it is difficult to take seriously, and Marglin does not, pointing out that Smith himself observes that a workman engaged in repetitive tasks has no occasion to exercise his understanding or to exercise his invention in finding out expedients for difficulties which never occur (734; V. i. f. 50). Adam Smith indeed very quickly notes that "All the improvements in machinery . . . have by no means been the inventions of those who had occasion to use the machines" but that

in the progress of society, philosophy or speculation becomes, like every other employment, the principal or sole task of a particular class of citizens. Like every other employment, too, it is subdivided into a great number of different branches, each of which affords occupation to a peculiar tribe or class of philosophers; and this sub-division of employment in philosophy, as well as in every other business, improves dexterity and saves time. (10; I. i. 9)

Waiting time does not impress Marglin either. A farmer gains from staying with a task long enough to minimize set-up time. A pinmaker could undertake the first of ten operations for a day or days at a time, and then change, to reduce set-up time to an insignificant portion of total work time and then move to the second.^[59] In this case, however, Marglin may have missed the point about the extent of the market. He claims that

if each producer could integrate the component tasks of pin manufacture into a marketable product, he would soon discover that he had no need to deal with the market for pins through the intermediation of the putter-outer. He could sell directly and appropriate to himself the profit that the capitalist derived from mediating between the producer and the market.^[60]

The pin producer now performs all the ten manufacturing tasks and markets the product as well. Peasants perhaps can sell their produce above their own sustenance in a local market. It is not clear that the pin market is so organized. The pin is a "very trifling manufacture."^[61] Any substantial number produced must be moved in what Smith calls "distant sale."^[62] Distant sale requires knowledge of languages, commercial practice, credit standings, modes of transport, etc., forms of dexterity and skill which the home pinmaker may not readily achieve.

The matter is neatly put in a letter of August 23, 1772 to Thomas Bentley by Josiah Wedgwood who sought to lower piece-rates for workers:

I have had several Talks with our men at the Ornamental works lately about the price of our workmanships, and the necessity of lowering it, especially in Flowerpots, Bowpots [boughpots] and Teapots, and as I find their chief reason against lowering their prices is the small quantity made of each, which creates them as much trouble in tuning their fiddle as playing the tune , I have promised them that they shall make dozens and Groces of Flower, and Teapots, and of the Vases and Bowpots too, as often as we dare venture at such quantities.^[63]

Wedgwood, of course, divided functions with the merchant Bentley, and Boulton with the merchant Fothergill. Scale sufficient to handle the waiting-time problem required distant sale, which required merchants. On occasion distant marketing preceded efficient scale in production; often they grew side by side. Colonial trade provided important outlets:

The process of industrialisation in England from the second quarter of the eighteenth century was to an important extent the response to colonial demands for nails, axes, firearms, buckles, coaches, clocks, saddles, handkerchiefs, buttons, cordage and a thousand other things, "Goods, several sorts."^[64]

To this list could be added pottery, both useful and ornamental, produced in the potteries of Staffordshire, the "bulk" of which was exported to the continent and the islands of North America, as well as to every port in Europe.^[65] Between Easter 1771 and Easter 1772, at its height, 72 percent of Yorkshire's production of woolens was exported. While output was increasing four times between 1770 and 1780, the export proportion was rising from roughly 40 percent (in 1695) to two-

thirds (in 1800).^[66] The notion of a producer selling his own output without the aid of specialists seems in these circumstances utopian.

Marglin has most difficulty in maintaining that the division of labour does not add to output per unit of input in improving dexterity. He makes several damaging concessions. Adam Smith would be difficult to counter if he had been dealing with musicians, dancers or surgeons;^[67] to the extent that the skills at issue are difficult to acquire, specialization is essential to the division of labour into separate operations.^[68] Later he suggests that factory employment can be attractive to men, whereas earlier he had said that whenever it is possible to avoid factory employment, workers had done so.^[69] Most of his illustrations are drawn from the cotton-textile industry. In engineering, or in pottery, however, natural ability, training and practice are all needed:

My idea was to settle a manufactory for the steam engine near to my own by the side of the canal where I would erect all the conveniences necessary for the completion of the engines and from which manufactory we would serve all the world with engines of all sizes. By these means and your [i.e. James Watt] assistance we could engage and instruct some excellent workmen (with more excellent tools than would be worth any man's while to procure for one single engine) and could execute the engine 20 per cent cheaper than it would otherwise be executed and with as great a difference in accuracy as there is between the blacksmith and the mathematical instrument maker.^[70]

I have trained up many and am training up more young plain Country Lads, all of which that betray any genius are taught to draw, from which I derive many advantages that are not to be found in any manufacture that is or can be established in a great and Debauched capital.^[71]

We have not got thirty hands here, but I have much ado to keep the new ones quiet. Some will not work in Black. Others say they will never learn this new business, and want to be released to make Terrines and sauce boats again. I do not know what I shall do with them, we have too many fresh hands to take in at once, though we have business enough for them, if they knew, or would have the patience to learn to do it, but they do not seem to relish the thought of a second apprenticeship.^[72]

You observe very justly that few hands can be got to paint flowers in the style we want them. I may add, nor any other work we do — We must make them  . . . Where among our Potters could I get a complete Vase maker? Nay I could not get a hand through the whole Pottery to make a tableplate without training them up for that purpose, and you must be content to train up such Painters as offer to you and not turn them adrift because they cannot immediately form their hands to our new stile.^[73]

You must have more Painters — You shall, — But remember that there are none ready made  . . . So please give my respects to Mr. Rhodes, and tell him if any man who offers himself is sober , he must make him everything else .^[74]

A strong case can be made that the division of labour has very little to do with capitalism. Plato's interest in the subject has been referred to earlier. Haley asserts that Dutch shipbuilding in the seventeenth century would have made a better illustration of division of labour than pinmaking.^[75] Standardized flyboats were built at Saandam using laboursaving machinery — wind-driven saw mills and great cranes which handled heavy timbers; inventories of timber for building four or five thousand ships were kept in hand. In the second war with England, Saandam turned out a ship a day.^[76] A century earlier, moreover, in 1574, the Arsenal at Venice, a shipyard under public management, turned out a merchant galley for the edification of Henry III of France in less than an hour:

Mass production of ships of a standard design became the hallmark of the Venetian Arsenal. Workmen developed unusual skill and efficiency as a result of specialisation; standard replaceable parts made repairs easy; stockpiling such parts allowed the state to maintain a cadre of skilled men always available, who, in case of need, could direct the efforts of a suddenly enlarged workforce, such as might be required for building a new fleet in a hurry.^[77]

Marglin admits that evidence in support of his view that the division of labour represents not efficiency but an attempt to divide and conquer is "naturally enough, not easy to come by", and "not overwhelming".^[78] He cites in support a cotton textile manufacturer who kept his manager from knowing anything about mixing cotton, or costs, so that he could never take the business away from him.^[79] Evidence that care was taken not to furnish industrial secrets to individuals considered as possible candidates for setting up rival establishments is abundant, however. Workmen who had been trained were not encouraged to take their skills elsewhere; on the contrary, manufacturers like Josiah Wedgwood petitioned Parliament to restrict their movement abroad, were wary of imitators, separated the different departments in Etruria and gave each one only outside entrances, so as to prevent workmen in one department from wandering about and picking up proprietary information.^[80] At one point (1769) Wedgwood wrote:

If we get these new painters, and the figure makers, we shall do pretty well in those branches. But these hands should if possible be kept by themselves 'till we are better acquainted with them otherwise they may do us a great deal of mischief if we should be obliged to part with them soon.^[81]

It is true enough that owners of proprietary information hung on to it under capitalism as long as they could. It is also true that competition tended to erode its scarcity value. The merchant started out with a monopoly of information, concerning where goods could be found, and

where they were wanted. The monopoly over information was related to education, and when education became general, the merchant lost his pre-eminence, except to the extent that he innovated; direct buying and selling replaced him. His efforts to make goods of higher quality, more promptly and cheaper, were part of the innovating process, and generally involved improvements which were unpatentable and insufficiently distinctive to be awarded prizes.

Marglin further insists that the move from the cottage to the factory was prompted by efforts to enforce the division of labour and thereby exploit workers, rather than by application of power, prevention of pilferage and adulteration (the worker's only countervailing tactic, according to Marglin). The view is a familiar one. Charles Bray regarded the ordinary factory as a "cunning device to cheat workmen out of their birthright" and justified the cottage factory which the Quakers set up in Coventry as Owenism.^[82] One could equally refer to Karl Polanyi, a Christian socialist, who excoriated the market but exonerated the factory,^[83] or Lazlett who embraces the market but rejects the factory.^[84] But to pursue these aspects of the industrial revolution would take us too far afield.

Smith was aware that the division of labour could lead to a dead end; in a passage far removed from Book I, he holds:

The man whose life is spent performing a few simple operations, of which the effects too are, perhaps, always the same or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become . . . His dexterity at his own particular trade seems, in his manner, to be acquired at the expense of his intellectual, social and martial virtues . . . In the barbarous societies . . . the varied occupations of every man oblige every man to exert his capacity, and to invent expedients for removing difficulties which are continually occurring. Invention is kept alive, and the mind is not suffered to fall into that drowsy stupidity, which, in a civilized society, seems to numb the understanding of almost all the inferior ranks of people.^[85]

This emphasis on the social aspects of the division of labour anticipates a line of argument found in Mary Wollstonecraft, who maintains that:

The time which, a celebrated writer says, is sauntered away, in going from one part of an employment to another, is the very time that preserves the man from degenerating into a brute . . . The very gait of the man who is his own master is so much more steady than the slouching step of the servant of a servant.^[86]

It is also found in John Ruskin, who held that division of labour should be regarded as division of men:

Divided into mere fragments of men — broken into small fragments and crumbs of life, so that all the little piece of intelligence that is left in a man is not enough to make a pin, or a nail, but exhausts itself in making the point of a pin, or the head of a nail.^[87]

These unhappy consequences may result from the division of labour, or what van der Wee refers to as "excessive division of labour," though in the cottage textile industry, rather than the factory.^[88] It is a fair point that the social consequences of the division of labour may be untoward, as Smith recognizes. It is quite a different matter to assert that the economic purpose of the division of labour was exploitation rather than efficiency.

Adam Smith's discussion of allocation, distribution, and the division of labour through the market was largely related to what is now called "proto-industrialization", rather than the industrialization into large factories of the industrial revolution. Large-scale production had existed in isolation for centuries, and in Britain for decades. But proto-industrialization, the specialization by merchants, weavers, spinners, nailers, pinmakers, philosophers, and speculators was efficient rather than exploitative. Rudolf Braun has shown for the Zurich Oberland how proto-industrialization raised the level of living of peasants who were overcrowded on limited land, rather than lowering it. Cottage industry did not uproot men. On the contrary, it gave them work and bread and enabled them not to migrate from their homeland.^[89] The factory in the Zurich Oberland was a defensive measure to enable the area to meet the competition of British machine-spun.

In cotton textiles in Switzerland, the early factory pioneers were technical people — Wyss, Honneger, Wild, Oberholzer — who worked on making cloth cheaper, and not on impoverishing the workers who were impoverished by improved and cheaper British exports. The less efficient cottage workers moved into the factory and improved their standard. It was the more effective cottage workers, with greater dexterity, who held on in cottage industry too long when the higher efficiency of factories, as revealed by cheaper goods of a given quality, sealed their doom.^[90]

Let us permit the division of labour between Adam Smith and, say, Josiah Wedgwood, though both in their way were protean. Wedgwood was a nucleus-maker and a man who understood nucleation;

I have for some time been reviewing my experiments, and I find such Roots , such Seeds would open and branch wonderfully if I could nail myself down to cultivation of them for a year or two. And the Fox-Hunter does not enjoy more pleasure from the chace, than I do from the prosecution of my experiments when I am fairly enter'd in the field, and the farther I go, the wider the field extends before me.^[91]

Smith was a man of wide interests in law, moral philosophy, criticism, rhetoric, and agriculture.^[92] He approached the heart of the industrial revolution with his division of labour, specialization and exchange, and extent of the market, and planted the seed which has developed into the great social science of economics. That surely is glory enough.