Research on the Nature and Causes of National Wealth (Part 2)

Author: Adam Smith (English)
Publisher:
Publication Date: Not available
Features: Adam Smith, a renowned British bourgeois economist, is the author of The Wealth of Nations, published in 1776. At that time, it was the period of the growth of British capitalism, and British handicraft manufacturing was beginning to transition to large-scale industry. The development of British industry was still largely constrained by the remnants of feudalism and the restrictive policies of mercantilism, which were once popular. The young British bourgeoisie, eager to remove obstacles from its path forward, urgently demanded a free economic theory system to pave the way for its progress. Adam Smith's The Wealth of Nations emerged during this historical period, carrying such a class historical mission. This book summarized the experience of capitalist development in various countries during the early modern period and, on the basis of critically absorbing important economic theories of the time, provided a systematic and clear description of the entire process of national economic movement. After its publication, it not only significantly promoted the development of British capitalism but also had a more extensive impact on the development of world capitalism than any other bourgeois economic work. No wonder some bourgeois scholars at the time revered it as a treasure. However, history soon revealed its limitations and flaws. About a century after its publication, in the 1870s and 1880s of the 19th century, capitalist economies had gradually begun to transition from a stage of free competition to one of monopoly. From then on, the free and natural system emphasized by Smith had ceased to function. Less than half a century later, a socialist country emerged on the historical stage, which completely negated the eternal nature of capitalism as emphasized by Smith. Now, in the historical stage where imperialism is increasingly declining and socialist revolutions are continuously advancing toward victory, although some reactionary bourgeois vulgar economists still emphasize free-market economy in different ways and advocate the reform or rebirth of capitalism, Smith's economic treatise from the era of capitalist growth has long lost its practical significance and only holds historical significance in the history of political economy. Lenin once instructed us: "To judge the merits of historical figures, not by what they failed to provide for modern demands, but by what new things they contributed compared to their predecessors." What contributions did Adam Smith's The Wealth of Nations make to the history of political economy, and what new insights did he offer through this work compared to his predecessors? To answer this question, one must first understand the economic questions raised by the era in which he lived. Modern capitalist economic life began in the mercantilist era. This economic life initially demanded answers to fundamental questions: what is wealth, what is the source of wealth, and how can wealth be accumulated rapidly. Mercantilism first provided answers to these questions. Scholars who held differing opinions on these answers included British Enlightenment economists such as Petty and Locke, as well as French economists like Boisguilbert and the Physiocrats like Quesnay and Du Pont de Nemours. For an economist to establish a fundamental theory related to the movement of the entire national economy, it was first necessary to determine whether the economic development of the society or country he belonged to allowed for a comprehensive observation. Smith's predecessors in the field of economics lacked such conditions, but Smith, living in Britain during the period of capitalist growth, had the opportunity to propose new insights on these issues based on the theories of his predecessors. When mercantilists, based on the practical needs of commodity circulation in their societies and relying on intuition, emphasized that wealth consisted solely of money or gold, Enlightenment economists like Petty and Locke had to make considerable efforts to break free from this prejudice. However, later physiocrats, while correctly arguing that the products of labor, including means of production and means of subsistence, were wealth, did not consider money or gold, which were also products of labor, as wealth. It was only with Adam Smith that, building on these debates, the conclusion that money was a component part of the total wealth of society, or at most one component part, was derived from the movement of real economic life. This conclusion encompassed the source of social wealth and the accumulation of wealth. If wealth was not primarily money or gold, then the source of wealth could not be gold mines, wealthy colonies, or trade surpluses. Enlightenment economist Petty first emphasized that wealth came from nature and labor, but he did not clarify the relationship between the two in production. Physiocrats emphasized the use value of goods, believing that wealth came from agricultural labor, which produced pure products. Adam Smith, however, approached the formation of commodity value and, in the very first sentence of his work, argued that "the annual labor of a nation is originally the source of the whole annual produce of its consumption, both of necessaries and of conveniences," and the labor he referred to was general, breaking free from the narrow circle of agricultural labor set by the physiocrats. In Smith's view, social wealth came from labor, and the growth of social wealth depended not only on the amount of labor involved but more importantly on the greater labor productivity. For capitalist society, the productivity of labor was reflected in the fact that it not only produced wages as the price of labor for the workers themselves but also generated profits for capitalists and rent for landlords. These two types of income were deducted from the products or value produced by labor. Here, we see: first, Smith regarded labor as the correct universal measure of commodity value, believing that "only labor can compare the values of commodities in all times and places"; second, he regarded capitalist production as the production of value and surplus value; and third, he regarded the production relations of the three major classes in capitalist society as the foundation of circulation and distribution relations, with the theory of value being seen as the basis of distribution theory. In all these fundamental arguments that embody the labor theory of value—surplus value, especially in his comprehensive and systematic discussion of the entire capitalist economic movement or its process of capital accumulation, he indeed proposed some new insights that his predecessors in economics had not. However, due to the limitations of his class position and the relatively underdeveloped socio-economic conditions of capitalism at the time, Smith could not correctly understand the historical transitional nature of the capitalist system itself. He consistently believed that capitalism was in line with human nature and natural order, and that as long as some artificial and unnatural socio-economic measures that hindered its development, such as the abolition of outdated guild systems and mercantilist restrictive policies, were removed, allowing everyone to participate in free competition with their labor or capital, capitalism would naturally and freely establish itself and continue to develop indefinitely. He also believed that individuals were naturally self-interested and that as long as their freedom to compete was not hindered, the greater the benefits they obtained personally, the richer society would become. This bourgeois utilitarian error led him to remain within the following limits: "It began by criticizing the remnants of feudal productive and exchange forms and proved that they would inevitably be replaced by capitalist forms," establishing the aforementioned more correct arguments on value—surplus value in this sense; as soon as it encountered the contradictions of capitalism itself, guided by this bourgeois utilitarian thought, it could no longer advance. This dual methodology, determined by his class perspective—on the one hand, the examination of internal connections, and on the other, the examination of external phenomena—made each of his correct arguments appear as half-finished, incomplete, and full of contradictions. For example, even regarding the pivotal argument about the key labor determining commodity value, he argued on the one hand that the value of commodities was determined by the amount of labor expended in their production, but in some cases, he emphasized that the value of commodities was determined by the amount of labor they could obtain in exchange; on the one hand, he stated that the value of commodities was divided into wages, profits, and rent, and the error in this proposition lay only in omitting constant capital; but in other cases, he emphasized that the value of commodities was composed of wages, profits, and rent, which not only omitted constant capital but also made the commodity value determined in the previous case extremely uncertain. Not only were the statements about commodity value correct and incorrect, scientific and vulgar, but so were the statements about the functions of money and its production process, as well as the theory of capital accumulation, all of which were a mixture of correct and incorrect, scientific and vulgar arguments. Regarding this point, in addition to explaining it from the perspective of his viewpoints and methods, we must also deeply understand Marx's historical materialist evaluation of Smith's contradictory theory of value. He said, "In Adam Smith's book, we not only see the traces of 'opposing views' on the concept of value, but not only two, but three, and more precisely, even four sharply opposing views on value, which coexist and interweave in his book without conflict. In the founders of political economy, this was quite natural, for he had to explore, experiment, and struggle against the confusion of ideas that had just begun to form." As for his relatively optimistic and naturally harmonious tendency in discussing distribution, regarding the relationships between the three major classes in society, this was also due to the fact that the struggle between the bourgeoisie and the proletariat was still in its early stages, and the conflict between the capitalist class and the landlord class was not as sharp as after the Industrial Revolution. This was different from the later vulgar economists, who blindly advocated the doctrine of class harmony to conceal the already very intense class struggle. In short, this economic treatise by Smith, in terms of its analysis of capitalist production relations, undoubtedly contained many contradictions and vulgar arguments, but as a representative work of bourgeois economics during its formative period, it did indeed exhibit many scientific elements and was a scientific research achievement of classical bourgeois economics established on the basis of critiquing previous economic theories. Due to the dual characteristics of correct and incorrect, scientific and vulgar, in its research methods, its influence on later political economy was also twofold. Shortly after the publication of this book, British handicraft manufacturing, driven by the Industrial Revolution, rapidly developed into large-scale industry, while the internal contradictions of the capitalist system also began to emerge. Ricardo, following Smith, took the labor theory of value and the distribution theory based on it to a level that no scholar from the bourgeois standpoint could surpass. Ricardo's representative work, Principles of Political Economy and Taxation, was published in 1817. In the 1820s, some utopian socialists used Ricardo's analysis to promote their sociological theories. By the 1840s, 1850s, and 1860s, Marx continued to work on critiquing and absorbing the entire classical bourgeois economics, establishing political economy that served the proletariat. Later, both Engels and Lenin regarded classical economics, as well as Adam Smith's and Ricardo's labor and surplus value theories, as the source of Marxist political economy. However, as capitalism developed further, its internal contradictions became increasingly apparent, the struggle between the working class and the bourgeoisie intensified, and the spread of Marxist political economy shook the rule of the capitalist system. As a result, bourgeois economists after the 1820s of the 19th century tried to avoid the correct arguments in Smith's theory and instead used its incorrect and vulgar arguments to slander Marx's economic theory. After the 1870s, Marxist economics had already gained dominance in the workers' movement, and therefore, the Austrian School and its variants in the United States and Britain, which claimed to oppose Marxist economics, used the opposition to classical economics—or more precisely, the opposition to the scientific elements of classical economic theory—as an indirect means to oppose Marx's economic theory. Regarding this point, we need only see how B?hm-Bawerk and Keynes opposed Adam Smith and Ricardo. When bourgeois vulgar economists attacked the classical theories of their predecessors, Adam Smith and Ricardo, for opposing Marxist economics without hesitation, we, in order to defend Marxist economics and to enhance our understanding of it from the perspective of historical development, should scientifically approach and reintroduce the economic theories of Smith and even Ricardo, which has practical significance. In the late 19th century, Yan Fu, a figure in China's late Qing reform movement, presented this book to Emperor Guangxu, advocating for a national policy modeled on Adam Smith's "enriching the ruler and enriching the people," hoping to contribute to the late Qing reform "great cause." However, his translation, titled The Wealth of Nations, published in 1902, did not receive any significant attention. This was not only due to the overly difficult and elegant translation, with many omissions, but mainly because the socio-economic and cultural conditions of the late Qing period were far too distant from its demands. In 1931, Comrade Guo Dali and I translated it into Chinese again and titled it The Wealth of Nations. The main motivation for our translation at the time was that, after the October Socialist Revolution, there was no longer any capitalist future in China. We had planned to translate this book and other works of classical bourgeois economics as preparation for translating Capital, in order to promote Marxist political economy. We knew that Capital was established on the basis of critiquing bourgeois economics, especially the works of Adam Smith and Ricardo, as Marxist political economy. Some familiarity with and understanding of the economic works of Adam Smith and Ricardo would greatly enhance our understanding of Capital. In fact, during the process of translating Capital, we also deeply felt the help it provided to translate the works of Adam Smith and Ricardo. After the publication of Capital, our historical task of translating Smith's The Wealth of Nations was considered completed. After the liberation of the nation, people's publishing undertakings had to be arranged comprehensively based on the current and long-term interests of socialism. The Commercial Press has repeatedly proposed the revision of the The Wealth of Nations translation for the purpose of systematically and selectively translating and introducing philosophical and social science classics from all over the world. This translation has been published for 35 years. In some places, it did not clearly express the original meaning of the author, and there were individual errors, as well as many grammatical and lexical issues that needed to be considered and standardized. After revision by Comrades Chen Fusheng and Chen Zhenhua, the translation has been significantly improved. However, there are still inevitable errors, for which we, especially for me, are responsible. During this revision, the title was changed from The Wealth of Nations to The Nature and Causes of the Wealth of Nations, in accordance with the full title of the original work. Wang Yanan May 1965, Xiamen