ADAM SMITH ECONOMICS: Who was Left Behind?

In a new generation of internationalism and globalization has the idea of the ‘wealth of nations’ changed? A quick answer would be yes. The states represent a completely different establishment of economic progress and development. The enlightened period of the 1700’s gave way to the 1800’s industrialization and the 1900’s information age. The great economic genius Adam Smith could not have imagined the extent of humankind’s industrial and informational development. The benevolence of the baker, butcher, and brewer has not changed. Society depends on trade (using currency or barter methods), in order for the coexistence of a modern society with professions that may provide a vast array of services that are not necessary to sustain life. Overall, the original notion of Adam Smith’s view of real wealth is true today. He envisioned the real wealth of England not in the strength of the pound, or in the balance of trade, but in the ability to self-sustain itself. He claimed in one portion of the Wealth of Nations that society’s real wealth was in the sustainable products. It was not the services of a lawyer, accountant, or other tradesmen but in the grass roots of agriculture, that society is dependent.

In a “modern” world society places value on superfluous merchandise going beyond Mashlow’s Pyramid heights of self-actualization. Western Society has reached a pinnacle of self-actualization in which the majority’s basic needs are satisfied. This can be is seen in the low prices of essential food products. The real price of self-actualization is the sweat and blood of farmers. On a societal pyramid, the agriculturalist should be near the top. It has taken western society hundred of years to reach this period, not at the expense of industrialist but at the expense of the farmers. After two hundred years of progress, should not the agriculturalist be among the elite and wealthy? Without domestic agricultural, industrialization would be an ambition like establishing a space station on the moon (something that could be attainable someday with the right resources). Agriculture fueled the industrial revolution (and the human race), and then was promptly left behind by manufacturing industry supplying society with “more important” essential services.

So what can fix agriculture? Is it safe to put back the clock to an Amish dependent on farming, closing the world to globalization, or is it even feasible return to a simple a self-sustainable society? The answer can be determined by examining further alternatives. The manufacturing sector of the economy has held farmers hostage for too long. The chain of product refinement no longer stops at the farmer. The farmer whether his product is Soya Beans, Corn, Wheat, Carrots, Peas, Eggs, or Milk is required to sell his produce to the initial manufactures. They clean and cut the produce up and place it into neat little packages, bags, or cans. A one-step process two hundred years ago has become a long value chain. Government requirements to promote a healthy generation have placed health requirements on products like milk. A few decades ago, milk went in a bucket and then into an icebox. As manufacturing capacity grew, the industrialist started to play farmer and created a long-term problem whose initial results has created the mad cow scares. The basic solution to the problem of over-manufacturing is to scale back production and value chain growth and permit the natural resource growers to refine their own produce (get rid of the Canadian Wheat Board would be a good start). If the agricultural sector controlled the value-chain, farmers could get $0.20 for every loaf of bread instead of $0.01. This would not be attainable without the Government mandating the process. The only other solution to maintain the cost of production (today’s value chain) is for the Federal Government to intervene in some other form. To maintain the delicate economic balance at the grocery store the legislative bodies should subsidize the agricultural industry for lost profits due to the over-manufacturing of the products. The over-manufacturing and increased refining cost explains why commodity prices are ‘fixed’ low so that the rest of the value chain can make a profit. Its time that the Federal Government increased current subsidies ensure that there is a “P” for profit in the word agriculture, instead of a big “L” for losses.