Smith and Ricardo 205same number of people as a consequence of the division of labor
is due to three things. 1) The increased dexterity of the individual
worker. 2) the saving of time lost by going from one type of work
to another. 3) The invention of machines to assists one man in
doing the work of many. This last condition, Smith says, arises
since machines are often invented by men who seek to save their
own time and labor on whatever job occupies them. This division
of labor, basically applicable to industrial production rather than
agriculture, is responsible for the increase of production which
benefits the entire society. Smith sees the increase of production
as the source of national wealth, and a continual spiral of
increasing well being for the entire community.
Wages, of course, are necessarily tied to labor. “The produce
of labor constitutes the natural recompense in wages of labor.”
As a matter of fact, Smith believed that the entire produce of
labor initially belonged to the laborer. But, as society became
more complex, and concepts of rent and capital entered into the
economic picture, wages became part of the entire package of
economic enterprise consisting of rent, capital and wages.
Wages of course should be sufficient for the laborer to
maintain himself and his family. In that way the continuum of
economic prosperity will continue. Laborers are in that sense, a
commodity which must be available for production. Smith
maintains that if workers are not paid enough to raise a family the
labor force will decline and wages would rise according to the
law of supply and demand. The result of higher wages will be an
increase in population. Smith sees a rise in population as a mark
of national prosperity.
Smith’s vision of the modem industrial state is an optimistic
prediction of continued growth, prosperity, and improvement of
the social conditions of the general public. Only the refusal of
the government to allow the natural market mechanism to
function can undermine this process. Also, the government
must carry out its proper responsibilities regarding monopolies
for Smith’s vision to be realized.
Monopolies consist of four types: 1) Natural monopolies are
those monopolies which exist as a resource of a particular area,
produced by nature. Such natural monopolies as diamonds, oil,
iron, or gold exist independent of man’s ability to produce the
commodity. 2) Necessary monopolies, often referred to as