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Nitu Andreea - 113 D Of the Wages of Labour: In this section, Smith describes how the wages of labour are

dictated primarily by the competition among labourers and masters. hen labourers bid against one another for limited opportunities for employment, the wages of labour collecti!ely fall, whereas when employers compete against one another for limited supplies of labour, the wages of labour collecti!ely rise. "owe!er, this process of competition is often circum!ented by combinations among labourers and among masters. hen labourers combine and no longer bid against one another, their wages rise, whereas when masters combine, wages fall. In Smith#s day, it should be noted, organi$ed labour was dealt with !ery harshly by the law. Smith himself wrote about the %se!erity% of such laws against wor&er actions, and made a point to contrast the %clamour% of the %masters% against wor&ers associations, while associations and collusions of the masters %are ne!er heard by the people% though such actions are %always% and %e!erywhere% ta&ing place' % e rarely hear, it has been said, of the combinations of masters, though fre(uently of those of wor&men. )ut whoe!er imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the sub*ect. +asters are always and e!erywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour abo!e their actual rate...+asters, too, sometimes enter into particular combinations to sin& the wages of labour e!en below this rate. ,hese are always conducted with the utmost silence and secrecy till the moment of e-ecution. and when the wor&men yield, as they sometimes do without resistance, though se!erely felt by them, they are ne!er heard of by other people% In contrast, when wor&ers combine, %the!er cease to call aloud for the assistance of the ci!il magistrate, and the rigorous e-ecution of those laws which ha!e been enacted with so much se!erity against the combination of ser!ants, labourers, and *ourneymen.%/101 In societies where the amount of labour e-ceeds the amount of re!enue a!ailable for waged labour, competition among wor&ers is greater than the competition among employers, and wages fall. In!ersely, where re!enue is abundant, labour wages rise. Smith argues that, therefore, labour wages only rise as a result of greater re!enue disposed to pay for labour. Smith thought labour the same as any other commodity in this respect' %the demand for men, li&e that for any other commodity, necessarily regulates the production of men. (uic&ens it when it goes on too slowly, and stops it when it ad!ances too fast. It is this demand which regulates and determines the state of propagation in all the different countries of the world, in North America, in 2urope, and in 3hina. which renders it rapidly progressi!e in the first, slow and gradual in the second, and altogether stationary in the last.%/111 "owe!er, the amount of re!enue must increase constantly in proportion to the amount of labour for wages to remain high. Smith illustrates this by *u-taposing 2ngland with the North American colonies. In 2ngland, there is more re!enue than in the colonies, but wages are lower, because more wor&ers floc& to new employment opportunities caused by the large amount of re!enue4 so wor&ers e!entually compete against each other as much as they did before. )y contrast, as capital continues to flow to the colonial economies at least at the same rate that population increases to %fill out% this e-cess capital, wages there stay higher than in 2ngland. Smith was highly concerned about the problems of po!erty. "e writes, %po!erty, though it does not pre!ent the generation, is e-tremely unfa!ourable to the rearing of children... It is not uncommon... in the "ighlands of Scotland for a mother who has borne twenty children not to ha!e two ali!e... In some places one half the children born die before they are four years of age. in many places before they are se!en. and in almost all places before they are nine or ten. ,his great mortality, howe!er, will e!ery where be found chiefly among the children of the common people, who cannot afford to tend them with the same care as those of better station.%/151 ,he only way to determine whether a man is rich or poor is to e-amine the amount of labour he can afford to purchase. %6abour is the real e-change for commodities%. Smith also describes the relation of cheap years and the production of manufactures !ersus the production in dear years. "e argues that while some e-amples such as the linen production in 7rance shows a correlation, another e-ample in Scotland shows the opposite. "e concludes that there are too many !ariables to ma&e any statement about this.