“Don’t put all of your eggs in one basket.” So the old wife would tells us. The modern economist, who, like the rest of the world, does not have time for the old wife, tells us quite another thing.

Adam Smith, the father of capitalism, argues in “The Wealth of Nations”, capitalism’s midwife, ardently against this proverb. In his opening chapter, entitled, “Of the Division of Labour,” Smith argues that “the division of labour…. occasions, in every art, a proportionable increase of the productive powers of labour” (9).

The primary reason for this increase in productive powers was the greater capacity the division of labor gave workers to perfect their craft. Smith demonstrated this principle by reference to the construction of pins. Were one man to set about constructing pins, Smith reasoned, he would need to learn to complete eighteen distinct tasks (such as drawing out, cutting, pointing, and grinding the wire), and, after learning them, perfect them. Were the labor divided between multiple men, each would only be expected to learn two or three such tasks. A man could much more easily perfect two to three tasks than eighteen.

The term “division” here can be misleading, for it implies broadening and diversification, when in reality the division of labor causes narrowing and mundanity. It can diversify labor for the worker only in the same way cutting a babe in two can diversify children for the mother. For the worker in a specialized position, the result is a loss of diversity, not a gain. As Adam Smith envisioned it, “the farmer is… nothing but a farmer, the manufacturer, nothing but a manufacturer” (9).

The wisdom of Smith’s division of labor is for the individual to put all of his eggs into one basket- to forgo the ideal of “The Renaissance Man” for that of “The Specialized Man.” Ironically, in ____ General Introduction to Smith’s “The Wealth of Nations,” he hints that Smith may have been one of the “last great polymaths,” a fact which is perhaps directly attributable to the carrying out of Smith’s teachings.

Smith carried his argument for specialization further than the individual, though. “Every civilized society” engages in commerce between two classes of communities: “inhabitants of the town and those of the country.” The people of the country supply “the town with the means of subsistence, and the materials of manufacture,” and the people of the town repay the people of the country “by sending back a part of the manufactured produce to the inhabitants of the country” (376). The division of labor did not just mean that farmers would never manufacture nor manufacturers farm, it meant that manufacturers would never (except by occasion) interact with farmers nor farmers see manufacturers. It meant a division of communities. This division between town and country, Smith wrote (with either incredible credulity or overstatement), was, “as in all other cases, advantageous to all the different persons employed.” The countless Europeans before him who had died of starvation blockaded in a city by war or the Plague may have not been so cheery on the subject.

Smith argued that this specialization should extend to the highest level of society: that of the nation. Carrying on trade with foreign nations allowed for goods produced in excess (superfluities) to be exchanged for necessary goods. It also let nations focus on producing a few products well because it allowed them to purchase other necessary products from foreign nations:

By means of [foreign trade], the narrowness of the home market does not hinder the division of labour… from being carried to the highest perfection.”

Adam Smith, The Wealth of Nations, 447

Men should indeed put all their eggs in one basket, and communities should be careful that the eggs and baskets are not made within sight of each other, and England shouldn’t even bother with chickens, but should just fill their baskets with the eggs of French Hens.

“The Wealth of Nations” and America

Convening the year before “The Wealth of Nations” was published, the Second Continental Congress was comprised of a group which would perhaps have been a surprise to Smith, 9 of whom were farmers or plantation owners. He may also have been surprised to learn that the revolution which had begun earlier that year would result in victory for the underdeveloped nation of farmers, a nation which had, incidentally, been chartered by a document written by a farmer, Thomas Jefferson. As it stood in 1776, America little looked like the “civilized” society that Smith had propounded. Thomas Jefferson, knew that- and was thankful for it.

In Notes on Virginia, he weighed increasing manufacturing in America and decided, against the “political economists of Europe,” that America should remain agrarian. Jefferson did not believe that the political economists of Europe (Adam Smith among them) were wrong about the economic results of increased manufacturing. Indeed, he assented to manufacturing’s economic benefits. Jefferson thought the way of life farming provided far outstripped the economic benefit manufacturing provided.

“Those who labour in the earth are the chosen people of God… whose breasts he has made his peculiar deposit for substantial and genuine virtue… in which he keeps alive that sacred fire, which otherwise might escape from the face of the earth.”

Jefferson, A Note on Virginia

Jefferson thought that this peculiar deposit of genuine virtue important enough to outweigh the benefits of manufacturing. Understandably so- for he thought the continuance of America as a free and just people hinged on their connection with the land.

Corruption of morals in the mass of cultivators is a phenomenon of which no age nor nation has furnished an example. It is the mark set on those, who not looking up to heaven, to their own soil and industry, as does the husbandman, for their subsistance, depend for it on the casualties and caprice of customers.

Jefferson, A Note on Virginia

Then, in a phrase which we might expect from the drafter of the Declaration of Independence, he states that [d]ependance begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition. 

 Jefferson, along with the rest of the founders, believed that it was “the manners and spirit of a people which preserve a republic in vigour.” Because of this, he  maintained that the loss America would incur by remaining agrarian (and thus individually independent) would “be made up in happiness and permanence of government.” 

Though all of the founders placed a high premium on independence, they didn’t agree on how it should be secured, and for whom or what it should be secured. The divergence which arose between Alexander Hamilton and Jefferson on these points are some of the best known.

Alexander Hamilton, for instance, argued in a report before Congress in 1791, that America should do its best to increase manufacturing in its borders in order that the country might be “independent on foreign nations, for military and other essential supplies.”

It should be noted that, while Hamilton’s vision for America differed greatly from Jefferson’s, it did not coincide with Smith’s. Smith advocated for specialized manufacturing and believed dependence on foreign countries to be indispensable to its actualization. Hamilton advocated for manufacturing for the sake of America’s independence.

The difference between Hamilton and Jefferson’s position, then, was not one of economic prosperity versus independence, but of the relative priorities of national and personal independence.

“The Wealth of Nations” Realized

For better or worse, it has been Smith’s, not Jefferson or Hamilton’s, vision that has played out for America. In two great ways, the history of the world has indisputably followed the path outlined by Adam Smith: it has become increasingly opulent and it has become increasingly specialized. According to some estimates, since 1820, GDP per capita the world over has increased ten-fold, though of course that increase has been benefited some countries and groups more than others.

The evidence of specialization is similarly widespread. This specialization has occurred, much as Smith projected, on three levels: the individual, community, and national levels. This specialization, also in accord with Adam Smith’s projections, has thus resulted in three levels of dependency: Dependence at the National Level, Dependence at the Community Level, and Dependence at the Individual Level.