For Hobbes, individuals must be a larger population beneath authority, and those individuals must, by the very nature of the perpetuation of the species, cede all rights and control over to that authority. It is also well within the natural rule of law that there might be abuses of authority, and that even though rebellion might be expected, it is up to the individual to maintain that the State is the grand master and the individual but the pieces on the chessboard. The State, therefore, must control military, civil, judicial and even ecclesiastical powers (Martinich, 1992).
For Locke and Rousseau, however, the individual takes personal responsibility for action - liberalism and optimism show through in that life is not as it is now- but as its potential allows. This view of the social contract and natural rights was central to the progress of mankind. The idea of natural rights is quite ancient, having ground in the Greek and Roman philosophers. These rights, also called moral rights, are essentially the thought that everyone is born with certain rights that should be expressed, regardless of the law or circumstances of their birth. Natural rights are universal, not limited to one time period or country, and are thus quite debatable and often contingent upon the interpretation of those who exercise the greatest power within that particular society -- even though this is against the basis of natural rights itself (Magee, 2001). Thus, as early as the Greek stoics, rights were being used to debate the idea of slavery, and as the philosophers of the Enlightenment began to reexamine the rights of kings, they found that humans clearly have certain needs and means to express their own actualization- natural rights, or as Rousseau & Locke indicated, the right to what later would be paraphrased as "life, liberty, and the pursuit of happiness" (Tuck, 1982).
Making Economic Sense of Human Nature - What then were the educated to do with these contradictions in human nature? And since the Age of Discovery and Enlightenment were products of economics, the basic question is how to organize society. The Age of Discovery, the resultant Columbian Exchange in which the Old
World travelled to the New World, spreading culture, economic systems, religion, genetic disposition, and, of course, disease, required a new way of dealing with wealth. Essentially, this time signaled the beginnings of the modern era; an era in which the world became smaller -- discoverable, and, of course, usable. It was this rise of the great colonial empires, justified with the spreading of religious ideas but, in truth, focused on the acquisition of wealth that created so many determined explorers. This sharing of the ecology of the Old World and New World certainly changed the New World and the indigenous populations (The European Voyages of Exploration, 2001). Modern capitalism, and the rapid and huge development engendered by these voyages; along with the advantages of weapons and warfare technology resulted in a change so vast that no other areas even had a chance to catch up (Diamond, 2005). Yet, it would take the philosophical prose of Adam Smith to help make sense out of all this complexity.
First, Smith must take this view of human nature and help us understand how economic systems develop -- and function over time. There is a normal hierarchy: a hunter-gatherer society, nomadic but more stable agriculture, feudalism, and the business independence or capitalism. Different stages require different levels of structure, social and economic. For instance, during the hunter stage, a political-legal system is unnecessary because "there is scare any property… to there is seldom any established magistrate...
However, as society moves upward through a hierarchy and becomes more complex, people begin to acquire property (wealth) and therefore require a legal protectionist system. Smith is more like Locke in that he frowns upon an overreliance on governmental control, but also sees "the need for law enforcement for the defense of the rich against the poor, or of those who have some property against those who have none at all" (486). Feudalism, which for Smith is the logical next stage in the way human economic organization evolves, is really a transition period from a guild-driven market to a market driven economy, primarily because of the advances in technology and production. The final phase, commercial capitalism, is a self-correcting system of perfect liberty -- capitalism. This phase-based structure is important in two ways: remember that The Wealth of Nations was first published in 1776 -- in the midst of a huge agricultural revolution in England and a series of annoying revolts from American colonialists and second, that this new influx of capital (more food, more people, more goods, more specialization, more labor) had never been "managed" before.
What is it then, which could tangibly take the combination of wealth, a larger population, and produce a better life for individuals? Something so simple -- the division of labor, something that has existed as long as history has been written: some till the soil, others make bread, others make the dishes and utensils to eat the bread, and a very select few do little more than tell everyone else who to properly do their job. Smith takes this idea of the division of labor to an extreme; in primitive society the one who made the sharpest or most robust spear usually brought home the meat -- that person lived longer, had more children, and therefore passed those traits on. Once, that, and then another, and another skill was perfected, we had a striated society in which one person makes or does one thing while another person makes or does yet another -- and then everyone wants all the goods and services they can possible attain.
To move these goods, though, requires not just a division of labor and a managerial hierarchy, it requires trade. Since it is unlikely that any one group of people have 100% of all they need, the answer is trade with your neighbor for something he covets. For Smith, though, this trade had to be done as a win-win scenario for both parties, mutually beneficial. The value of goods, though, is transitional: in a society in which winter lasts a long time, food, heat and warmth are essential; conversely, individual's wants and needs are two different things.
Labor is what controls wealth -- it is essential, and it has a set of values that improve productivity and society. Labor grows into diversification, which only makes the process of labor more viable and powerful. Labor is a true measure of the worth of an individual because it alone establishes what funds are worth; instead of waiting for it to rain, or the rain to clear (in an agricultural bases system), modern capitalism asks us to breach protocol, stop wasting time, and spend every available effort (machine or human) in acquiring capital while serving the markets as a whole.
For labor to work on a grand scale, though, there must be freely conducted and mutually beneficial trade agreements. A person with A wanted more, so goes to another individual to trade B. For A. When enough goods, thus enough labor, saturate the market, it will self-regulate and the price of certain goods that are over-produced will go down, while those that remain rarer will go up. Then, too, when does this labor move from a physical act to having tangible value -- the concept of money.
For instance, in feudalism, a typical serf works a plot of land and keeps some of the product for his family, but gives the rest to the owner of the land. If the potter sells pot a for more than it has value to the farmer, then there is an imbalance in the win-win portion of fair trade and eventually the market will shut down.
Once this pattern becomes global (enlarges to its self-correcting point), Smith said that the world would be better for most people. Those that could perform labor would have fair value for their service, those that produced a good were putting labor in with natural resources to define a product, and even those whose task it was to manage the labor, product or wealth had a niche within society. To this end, Smith believed that free markets were the epitome of economic balance, that progress required, "little else…. But peace, easy taxes, and a tolerable administration of justice," three "things we know are quite difficult to achieve, even in the modern world.
The free market economy can be seen somewhat as a precursor to globalism. Rich and developed nations have wealth (capital) and can trade their expertise and technological abilities for the labor poorer countries can produce -- agriculture. Smith's continual view was that taken together, this would benefit both sides. However, he did not…
Adam Smith's Economic Philosophy: Just as Smith's moral point-of-view was ahead of his time with respect to ideas that others would popularize later, Smith presented matter-of-fact observations on the nature of work and the relationship between working people and society at large. More than one hundred years before Henry Ford revolutionized modern industry with his production line, Smith had explained the mechanism that accounted for its success. Using the example of manufacturing
To Smith, the natural world from which human beings emerged was not only insignificant and worthless, it was positively odious. He saw nothing to save, foster, or conserve about it. He thought people who lived in subsistence cultures were "so miserably poor they are frequently reduced to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish
. . . The gains of both are mutual and reciprocal, and the division of labour is in this, as in all other cases, advantageous to all the different persons employed in the various occupations into which it is subdivided." Therefore, the division of labor and human nature combine to produce a natural growth of the market, and the more people that are involved, the more opportunities for growth there
Adam Smith's Free Trade In Wealth of Nations, Adam Smith recognized that human beings have a natural propensity "to truck, barter, and exchange one thing for another." Smith saw the free trade of goods across borders as an extension of this human instinct. People exchange products and services as "free agents" in pursuit of their own individual interests. In the process, people become part of an international economy, connected across
Adam Smith He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases,
His lectures were a success as many eminent people of Edinburgh attended them and earned him a decent income. During the course of his lectures on English literature, Smith perhaps realized that his real vocation was economics. Hence, addition to English literature, he started to deliver lectures in economics in 1750-51 in which he advocated the doctrines of commercial liberty, based largely on the ideas of Hutcheson. It was also