"Natural" And "Unnatural" Development: Arrighi's Adam Smith

I David L. Prychitko I

I'm reading Giovanni Arrighi's Adam Smith in Beijing.  In it he tries to develop something of a Marxian Adam Smith.  The argument is rich and difficult, and I'm still trying to make sense of it.

I'm most interested in his claims about Smith's views on Chinese economic development.  Arrighi argues that Smith, in The Wealth of Nations, appeals to the Chinese development of his time as following a "natural" path, while British development followed an "unnatural" path.  Arrighi calls the former "market-based development" and the latter "capitalist development" proper. He apparently believes that Smith favors the former over the latter.

What is it?  I've found these words of Smith:

According to the natural course of things, therefore, the greater part of the capital of every growing society is, first, directed to agriculture, afterwards to manufactures, and last of all to foreign commerce.  This order of things is so very natural, that in every society that had any territory, it has always, I believe, been in some degree observed. Some of their lands must have been cultivated before any considerable towns could be established, and some sort of coarse industry they could well think of employing themselves in foreign commerce.

But though this natural order of things must have taken place in some degree in every such society, it has, in all the modern states of Europe, been, in many respects, entirely inverted. The foreign commerce of some of their cities has introduced all their finer manufactures, or such as were fit for distant sale; and manufactures and foreign commerce together, have given birth to the principal improvements of agriculture. The manners and customs which the nature of their original government introduced, and which remained after that government was greatly altered, necessarily forced them into this unnatural and retrograde order.

Book III, ch. 2 [I apologize for the italics.  Computer problem.]

With claims such as these, Arrighi applauds Smith for promoting, so he thinks, China's path to development, one which he maintains is still being carried out today.  It bypasses the class conflict that Marx emphasized during the so-called "unnatural" course established by the industrial revolution.

Smith's Wealth of Nations is loaded with interpretive problems.  Rothbard (correctly) sees in Smith the statements that help undergird Marx's notion of class alienation.  Arrighi sees an implicit if not direct criticism of British economic development.

Natural or unnatural -- whatever that really means -- we have to watch out for these historical accounts of growth that are used to develop theoretical accounts.  (I'm reminded of Rostow's Stages of Economic Growth.) By that I mean there is no reason to believe today that a nation naturally (let alone should) shoot for economic development based upon freeing up agricultural markets first, cities and urban areas second, and then international trade third.  One should resist the temptation to use history to develop a general theory. Britain's development might be an historical exception (if even those words make sense) but why call it, for that reason, unnatural?  It is surely not a theoretical exception.

The colleague who loaned me this book applauds Smith and Quesnay for focusing upon agriculture as a source of wealth and opulence, and seeks to promote China as an historical example that he argues continues to have lessons today. But what of Smith's primary argument that productivity and wealth stem ultimately from the social division of labor, which is limited (and developed) by the extent of the market?  That is a theoretical claim that can explain historical developments.  The particular circumstances -- institutional practices, industrial technology, information networks, natural resource capacity and so on -- differ over time.  Calling for "natural" land-led economic development today, despite my colleague's claims to the contrary, ignores the particular circumstances and skills that people find themselves in the here and now.

Back to Arrighi's book.  It is challenging, and he does have interesting and even fruitful things to say about the importance of decentralized, spontaneous development at the local level.  But I'm unimpressed with the concepts of natural and unnatural, as if history follows, or can be expected to follow, such a course.

Comments

[Roger Koppl]

I wonder if Smith wasn't thinking of Hume's History. Hume makes a big deal out of the fact that the French and low countries were way ahead of England, which was kind of a backwater, until sometime after 1500. Part of the catchup process, Hume says, was emulation of French and others by the English who thereby acquired a taste for refinements that they otherwise knew nothing of.

Anyway, isn't the context of Smith comments different than Arrighi seems to have in mind? Wasn't Smith talking about development from primitive conditions? There's been plenty of cities in China for some time now! Indeed, China was a big example of a developed economy for Smith.

[Pablo Kury]

I would think Adam Smith is discussing the proximity of commerce. You begin employing most of your initial capital in agriculture for your own sustenance. Later, advances generate surplus to commerce and so forth until you have the capacity to move your produce farther and farther away.

In regard to the capacity of some cities to invert the production pyramid and generating through commerce advances, just indicates how port cities (Amsterdam, London, etc.) could generate the commercial force needed to generate knowledge through trade.

You will always be interpreting texts in such a manner which benefits your point of view. Beauty is in the eye of the beholder.

[Current]

In what sense is Britain development supposed to have been "unnatural"? Do you know that Smith is referring to Britain in that second paragraph.

[Lee Kelly]

Are you saying that you weren't a farmer before you became an economist? How unnatural of you.

[Bill Stepp]

...many people don’t understand the way American health care works right now.

Krugman knows less about insurance that the average first year insurance agent, who knows a lot less than an insurance executive or actuary.

At least he is right that government is deeply involved in insurance markets, which is why they
don't function as well as many others.
And Medicare is a horror story, as many doctors know all too well.

Remind me again what this guy does for a living?

[NRH]

Maybe Smith isn't entirely correct when he speaks of the "retrograd" or "unnatural order of England," or maybe Prychitko and Giovanni are not using the same defintions (as has been the cuase of much economic confusion since the 17th century classical econmists)? I think that Smith is focusing on the 18th century specifically and Europe broadly, as opposed to, say, the Celtic invaders of the British Isles in the fifth century BC, followed by the Romans, then the Angles, Saxons and Jutes, then the Scandanavians, and then the Normans. Each invasion led to successive improvements in agro first (but never final). However, foreign commerce or industrialization is hard to determine which precedded which, as it depends on your definition and it also depends if you consider trade between British conquered lands during British imperialism as foreign or not. If no, then the British industrialization proceeded foreign commerce, and if yes, then vice versa. I have not thought this out completely yet, but maybe this is part of the confusion?
Either way, I don't think the latter two can be so clear cut as one came before the other. All three are not single instances, but a process, and it is hard for anyone to say which started first. However, I think it is safe to say that in all Euro societies, some form of agro proceeded both industrialization and foreign commerce.

[Dave Prychitko]

NRH: Both Arrighi and Smith are using the same definitions. I spent the time re-reading Smith and posting it in order to show our blog readers precisely how Smith uses the term, the term which Arrighi accepts.

I myself don't find value in "natural" and "unnatural" development as theoretical concepts. In short, I don't use them.

[NRH]

Professor Prychitko. First, I apologize. I actually just spouted that off really quickly after reading your quotes from Smith, and I, incorrectly, assumed I knew where the rest of the post was leading. I apologize for my misjudgement. Thanks for all your input, and keep the informative posts coming!

[Dave Prychitko]

NRH -- no problem.

[Sandy Ikeda]

David,

The heart of Smith's claim is that agriculture must precede urbanization. An antidote to this conventional wisdom is chapter 1 of Jane Jacobs's second book, _The Economy of Cities_ (1969), which is titled, "Cities first -- rural development later."

She argues, to paraphrase, agricultural development has to overcome two problems (1) the lack of opportunities to experiment and the staggering costs of experimenting in rural, low-density settlements and (2) the very low likelihood that any discovery that might be made will be diffused across society. Cities overcome both problems.

In other words, agriculture and related practices (also writing, numeracy, organized religion and eduction -- ie, culture) could only have emerged spontaneously in large, dense settlements established by hunter-gatherers looking to trade their goods. The "natural" course of development is thus the reverse of the received view.

[Dave Prychitko]

Sandy:

Thanks. I was going to mention Jacobs in the original post but I thought it was growing too long as it was. Jacobs is indeed the antidote.

[Rich Carpenter]

I may be wrong, but didn't Smith refer to the economies of the Far East as being stagnate? I'll have to get my copy of 'Wealth of Nations'...

[fundamentalist]

Smith mentions the Dutch Republic many times in "Wealth" as the best example of his system of natural liberty. The Dutch developed agriculture first, then commerce and manufacturing.

Developing ag first is important because in developing nations it employs the largest share of people. Improving ag releases workers for manufacturing and creates demand for manufactured goods by increasing incomes and reducing food costs, the biggest costs for poor people in poor nations. Because of the size of ag in most poor countries, you get the biggest bang for your buck by focusing there.