Tag / Wage Slavery

by doctormcgrail

Economics and the Value of Nations: Why Adam Smith Still Matters

Why, in the 21st century, should we still read Adam Smith? Often hailed as the “father of modern economics,” Smith is just as often dismissed as outdated—an 18th century thinker writing before industrialisation, automation, and the complex global economy we know today. Yet, as a closer reading of The Wealth of Nations (1776) reveals, Smith’s ideas remain deeply relevant—not because they offer final answers, but because they expose enduring questions about labour, value, and the structure of modern society.

This blog post offers a concise exploration of Smith’s place in economic thought, drawing on the evolution of economic theory in his time, his intellectual influences, and a critical evaluation of both his insights and his limitations. My blog is a shorter version of a longer (6,000 word) article which can be read here: Economics & the Value of Nations: A Snapshot on Smithian Scholarship.

The Modern Relevance of Adam Smith
At first glance, Smith’s world seems distant from ours. But on closer inspection, the society he described—what he termed “commercial society”—is the same one we inhabit today. Its defining feature is waged labour: people earning a living by selling their capacity to work. While earlier societies relied primarily on slaves, serfs, or domestic servants, Smith observed the rise of wage labour as the dominant social relationship—a condition that continues today.

Importantly, Smith wrote at a moment of transition. The social structure of modern capitalism had already emerged, even if the technological form—industrial machinery—had not yet fully developed. This gave him a unique vantage point. Without the distraction of machines, Smith could focus more clearly on the social relationships underpinning economic life, particularly how wages, profit, and rent are distributed across social classes.

Later economists, captivated by mechanisation, often misread these relationships. Thinkers such as Jean-Baptiste Say even treated machines as independent “factors of production” deserving income in their own right—an idea foreign to Smith. By contrast, Smith’s emphasis remained firmly on human labour and its organisation.

Competing Economic Theories in Smith’s Time
To understand Smith’s contribution, we need to situate him within the intellectual context of the late 18th century. Two dominant schools of thought shaped economic debate:


• Mercantilism
• Physiocracy


Smith’s work engages critically with both.

Mercantilism: Wealth Through Trade
Mercantilism argued that national wealth comes from maintaining a positive balance of trade—exporting more than you import. Rooted in the practical experience of merchants, it framed economic life as a process of buying cheap and selling dear.
However, mercantilist policies required heavy government intervention. States enforced monopolies, controlled trade routes, imposed tariffs, and maintained colonial systems to ensure profits. Colonies were restricted to trading with their “mother country,” creating protected markets that enriched merchants and, by extension, state revenues.

While this system could generate wealth for the metropole (e.g. Britain), it did so at a cost: higher prices, reduced competition, and greater inequality. Workers, in particular, bore the burden of inflated costs and heavy taxation. Despite Smith’s powerful critique, mercantilist policies persisted well into the 19th century, only gradually giving way to freer trade principles.

Physiocracy: Wealth from Nature
In contrast, the French Physiocrats located the source of wealth in nature, especially agriculture. Observing that agricultural production yields a surplus—planting one seed produces many—they concluded that only agriculture (and extractive industries like mining or fishing) truly created new wealth.

Urban industries, by comparison, were deemed “sterile.” A jeweller might reshape silver into necklaces, but the total quantity of silver remains unchanged. Physiocracy also introduced a powerful methodological innovation: systematic data collection. By tracking agricultural output, population, and economic activity, the Physiocrats could analyse economic growth empirically. They also advocated laissez-faire policies, arguing that government interference—such as price controls on bread—often made economic problems worse.

Smith’s Synthesis and Breakthrough
Adam Smith absorbed ideas from both traditions, particularly during his time in France, where he engaged directly with leading Physiocrats. Yet his contribution lies in transcending their limitations. Smith agreed that production is central to wealth, but he rejected the idea that only agriculture is productive. Instead, he identified human labour, across all sectors, as the true source of value.

His famous example of the pin factory illustrates this point. By dividing labour into specialised tasks, productivity increases dramatically—even without new machinery. This increase is not natural but social, arising from the organisation of work.
Smith also challenged the Physiocratic dismissal of trade. For him, exchange is not sterile; it motivates production. People produce not just for subsistence but for markets, responding to demand shaped by social needs.

Class Structure and Economic Insight
One of Smith’s enduring contributions is his clear articulation of a three-class system:

• Workers (earning wages)
• Capitalists (taking profit)
• Landowners (taking rent)

This framework remains influential today. Unlike earlier thinkers, Smith recognised the shared characteristics within each class. Workers across sectors are united by their dependence on wages, while business owners share a profit motive.

The Importance of Smith’s Library
Modern scholarship has deepened our understanding of Smith through the study of his personal library. This “hermeneutic” approach—interpreting Smith through the texts he read—reveals the intellectual world that shaped his thinking. Smith’s library contained works in multiple languages, travel accounts, and early economic texts like Richard Cantillon’s (1755 [1720s]) Essai sur la nature du commerce en général. By tracing Smith’s references back to these sources, we see how he adapted and reinterpreted earlier ideas.

For instance, from Cantillon, Smith draws insights about wages needing to cover not just workers’ survival but also population reproduction. This reflects a deep awareness of the relationship between labour, subsistence, and demographic growth.
Smith was also aware (from Cantillon’s work) that workers are perfectly capable of producing double what they require to survive.

The Labour Theory of Value: Insight and Problem
At the heart of Smith’s economics lies a powerful but problematic idea: that labour is the measure of value. In principle, this means that the value of goods reflects the (generic) labour time required to produce them.

However, Smith also recognises an apparent contradiction: workers do not receive the full value of what they produce. Instead, part of this value becomes profit for employers (and rent for landowners; interest for bankers; taxes for politicians).
This creates a theoretical tension. If goods exchange at their labour values, how can workers consistently receive less than the value of their labour?

Smith never fully resolves this issue. Later economists attempted to “correct” him, often abandoning the labour theory of value altogether. But another interpretation suggests that Smith was uncovering a real feature of capitalist society: a mismatch between value as a universal measure (of human effort) and the labour time of wage labourers (and how it can be the ‘measure’ of itself).

My longer article (link above) outlines this contradiction using the analogy of Kilograms as a measure of weight (which cannot then appear on the scales as a ‘Kilogram of Kilograms’). Marx resolved the ‘problem’ by noting that wage labourers are not paid for their ‘labour time’ (but for the product of their ‘recreation’ time, namely. their labour power.

Wealth vs. Value: A Crucial Distinction

Another key issue in Smith’s work is his use of the term “wealth.” He famously argues that labour is the source of all wealth, but this is only partly correct. Nature clearly provides wealth—sunlight, minerals, natural resources. What nature does not provide is value, which is a social construct arising from exchange. Smith’s failure to clearly distinguish between wealth and value leads to confusion. A more accurate title for his book might have been The Value of Nations, emphasising the social processes that determine economic outcomes.

Conclusion: A Thinker Worth Revisiting
Adam Smith’s Wealth of Nations remains a foundational text not because it offers flawless theory, but because it grapples with fundamental questions that are still unresolved in “mainstream” economic theory:

• What creates value?
• Why is value distributed in the way it is? [What is role of violence / exploitation?]
• What role do labour, nature, and exchange play in economic life?


Consequently, Smith’s insights into labour, class, and productivity continue to shape economic thought. At the same time, his unresolved contradictions—particularly around value and wages—highlight the complexity of the system he sought to understand. Far from being outdated, Smith’s work invites us to think more critically about the modern economy. His legacy lies not in providing final answers, but in opening a field of inquiry that remains in dispute.

by doctormcgrail

Racism and Fire: Capitalism’s Role in the Persistence of Race

October is Black History Month, and both of my institutional employers have emailed me with offers of Equality, Diversity and Inclusion (EDI) training as part of Continuing Professional Development (CPD), though not mandatory sessions.

Edinburgh University led the way (1st October) by presenting a one-hour workshop on a range of different groups and activities undertaking anti-racism activities (including profile-raising of minority staff networks, provision of links with outside bodies, and highlights on race education projects). Each presenter had about 10 minutes to outline (pitch) what their organisation was doing (and where it could be found).

At the end, the organisers struggled to get the question and answer (Q&A) session going, with no questions coming forward until one presenter felt duty-bound to ask something (of another presenter). This outcome was not due to lack of interest on behalf of the audience (being ‘self-selecting’, they were the ‘converted’). Rather, it was hard to think of ‘questions’ (to get a ‘discussion’ going) from such a factual presentation. What is there to disagree about?

The Open University offer was much more assertive in indicating that people will learn how to challenge their “white privilege” (by becoming aware of it) and, therein, an effective “ally” (who knows how to support people suffering racism and not how to ‘take over’ as a ‘white saviour’). At least this kind of anti-racism work allows more space for people to get into a debate. However, a general feeling of discomfort (about questioning the presented narrative) still pervades what is a workplace ‘instituted’ conversation, such that no-one is really going to challenge the expert anti-racist presenters / session leads.

The positive I take from such employer sanctioned events is that it is good to see the issue of racism being taken seriously, and provisioned with staff time (for those who choose to attend) by my employers. However, what makes me ‘chortle’ is the thought that I might now sit and wait for an email ‘ping’ to announce the equivalent EDI session on ‘The Exploitative Nature of Waged-Employment: Anti-work Initiatives’! Somehow, I can’t see that happening anytime (not even soon), within the ‘employer-employee’ environment. Yet, in anti-racism work, is it not important to investigate and explore the relationship between ‘the social construction of race’ and ‘the mode of production’ which gave rise to modern racism?

The Exploitative Source of Racism

Eric Williams, in Capitalism and Slavery (1944 – developed from his PhD research), observed that it was not racism that gave rise to the Atlantic slave trade. Rather, it was slavery which gave, and continues to give, substance to racism. On the basis of this thesis, whenever we see the smoke of racism rising it is incumbent upon us to look for the fire (the source of the smoke), or at least ask: ‘where is the smoke coming from?’ That is, we should ask ‘where is the slavery?’

To be clear, ‘smoke kills’ – it is not just a ‘signal’ meaning it can be ignored in order to shift ‘analysis’ elsewhere. But Williams’ point highlights that racism is not an ‘autoimmune disease’. It does not ‘seed itself’ in a vacuum, and has a cause (both a ground which it grows out of, and a ‘sense of progression’, or history, of which it is a part – everyone appears to be going ‘somewhere’ for some ‘reason’).

With the Atlantic slave trade, the exploitative source of the racism was ‘obvious’ – the system relied on one person being ‘enslaved’ in order to ‘serve’ another. And whilst Europeans in America initially took ‘white slaves’ (indentured poor, criminals, and vagabonds, even prisoners of war) with them (alongside a highly-oppressed population-half: women), the situation with rapid capital accumulation (the need to accumulate workers as ‘things’) meant there was soon a ‘lack’ of available people. This led to transportation from Africa to fulfil the ‘gap’. Initially, white and black slaves co-existed, even if unequally, but the ‘need’ (requirement) to categorise more and more individuals as ‘slaves’ eventually led to entire ‘groups’ of people taking on different roles in this system’s division of labour. Thus, skin-colour (being ‘black’) took on its slave-defining role.

But what about today’s voluntaristic, liberalised economies where chattel slavery (now in the form of ‘human trafficking’) has been pushed to the margins of ‘the economy’? Whilst there may be 26 million trafficked people (modern slaves) in the world today, this makes up a tiny proportion of the 6+ billion people surviving as ‘wage labourers’. So, why is racism still so widespread?

One answer, from Marx (1894), is that capitalism (in essence waged-labour, because this is the source of ‘profit’) is nothing other than “veiled slavery”! Consequently, following Marx’s assertion, Williams’ thesis holds true, with the persistence of racism (in its different forms: open, unconscious, institutionalised) being built upon the on-going existence of compulsory labour – forced not by the whip-hand but by the invisible-hand of ‘economic conditions’ (the primary condition, for most, being their propertylessness).

Indeed, in today’s contemporary corporate world, racism’s fundamental form is still the ‘reservation‘. On the one hand, there are those ‘reservoirs‘ of cheap labour ‘politically’ confined by ‘citizenship’ (or lack of it) to conditions maintained under brutal undemocratic regimes – a 21st century version of globalised apartheid with ranks of ‘nation states’ determining the extent to which an area of land mass is classified as totally useless (the ‘useless mouths’ of Afghanistan / Somalia / South Sudan) versus ripe for exploitation (Philippines / Nigeria / Bolivia).

On the other hand, there are those places were the very best (well-paid / good working condition) jobs, access to the required education, facilitation by the most ‘labour enhancing’ technologies, and consumption of advanced healthcare are ‘reserved‘ for people with specific ‘characteristics’ (including ‘citizenship’).

Taken together, these different symbiotic and bifurcated spatial reservations form a hierarchy in which skin-colour still plays a fundamental refining mechanism for the ‘underlying’ system of exploitation (capital accumulation through waged-labour). Though, in theory – and in terms of progressivist political myth-making about possible ‘futures’ liberated from race and racialism – a few ‘individuals’ are able to move from marginalised reservoirs to the lands of exclusively ‘reserved’ jobs. Such social mobility gives the impetus to much (but not all) anti-racism work within the world of corporate and institutional employers – whilst, of course, the central mechanisms of waged-labour exploitation remain untouched.

Is the Dream of Corporate Anti-racism possible?

Interestingly, with reference to Afrofuturist writing, Alex Zamalin (2025) points to one dystopian novel in which the imagined society had, finally, managed to expunge Black people, thereby producing a purified world. This is a different version of reaching a state of ‘colour-blindness’ compared to the corporate eutopia (good place). It is touching on the ‘completion’ scenario of the Nazi ‘Final Solution’ of a Jew-free Reich. But the novel is really raising the question that, if such a Nazi utopia ever ‘worked’, would the waged-labour mode of production have been maintained?

In the novel’s Black-free society, racism soon begins to re-emerge in a new form. Someone is (some ‘bodies’ are) always required to do the menial, bottom-of-the-rung jobs in any ‘exchangeable labour’ society and, consequently, the roaming, roving eyes of a surveyor class (whoever they might happen to be) begin to look for anyone who is ruddier or slightly ‘more pink’ than ‘everyone else’. Thus, a new ‘norm’ or ‘average’ is generated from which social categories (by skin, sex, height, voice-box) will ‘form’. In short, and in line with what I argue here, the categorisation process is being driven by the needs of ‘the economy’ and its forced / compelled ‘division of labour‘.

It is the social essence of capitalism’s reproductive structure (that there is a hierarchy based on ‘exchangeable labour‘) which determines the requirement for different social categories of labourers. But a ‘reason’ or justification must be given for the ordering of society (i.e., in the above dystopian society ‘you are overly pink’, though the same distinction could be based just as easily on eye-colour). The ‘passion’ (behind the reasoning) is more consistent and practical in its desire to make extractive exploitation feasible and sustainable (since this exploitation is the very means of survival for those ‘empowered’ but ‘reliant’ groups who eternally seek the social transfer of resources from person X – the ‘enslaved’ – to person Y – ‘the masters of money’).

References:

Marx, K. (1894) Capital: A Critique of Political Economy – Volume 3. [Edited by F. Engels / trans. by D. Fernbach (c) 1991]. London: Penguin.

Williams, E. (1944) Capitalism & Slavery. [Penguin Classics / 1994 imprint]. London: Penguin Random House UK.

Zamalin, A. (2025) ‘The Future of Afrofuturism: Thinking with Afrofuturism’ [Workshop Paper]. Part of Panel 3: Revisiting Utopianism from other critical and radical perspectives. AHRC Workshop 3 of Utopia & Failure: ‘Fail Again, Fail Better! Held at: King’s College London (Mon 8th and Tues 9th Sept).