The Wealth of Nations:

Conflict from competition, in Smith's model of social relations.

Adam Smith's The Wealth of Nations is a book of revolution. It is revolutionary as it
advocates the reordering of the economic and political relations of British society based on
a belief in free market competition. This essay argues that The Wealth of Nations is
based on a conflict model of social relations. That Smith is advocating a society whose
social, economic, and political relations are based on the conflict of competing interests
within the boundaries of a market economy. The economic competition of individuals
would eventually be replaced with that of competing groups, or combinations, designed to
enhance the economic power of those with shared economic interests. Such combinations
would represent competition and conflict expanded into the political sphere. This would
effectively see the emergence of new political and social forces to challenge the economic
and political power of the old classes, which itself would cause much conflict.

Smith's social model is based on the concept of people competing with each other in a
market economy, where the value of a commodity is what the market is prepared to pay.
In Smith's model a commodity is not only goods, materials, and land, but also the labour of
individuals.1 Inherent in such a model is social and political conflict, and as such Smith is
advocating a conflictual model of social relations. By conflict model what this essay means
is:

. . . the notion that societies are composed of groups that have fundamentally
different and conflicting interests. [Where conflict occurs from] . . . the relations of
power which exist between the different social groups, [and where the] . . . social
arrangements will benefit some groups at the expense of others. Because of the
existence of different interests and power relations, the potential for, and the
likelihood of, conflict is always present.2

This also relates to individuals as well as classes.

The conflict in Smith's model comes from the need for individuals to compete on a
continuous basis with other individuals, and inherent in competition is the idea, and reality,
of winners and losers. Take for example the case of profit versus wages. There is in a
free market economy the constant need of employers to make a profit, while at the same
time the requirement to pay wages to their labourers. There is then two competing
interests, the profits of the employer, and the labourers level of wages. Smith shows the
conflict between the two sides when he writes, a labourer must always earn enough to
maintain himself and his family3, while the interest of the employer is to " reduce [wages] to
[the] lowest rate which is consistent with humanity", and therefore increase his
profitability.4 Clearly, there are two areas for conflict in this example; the conflict between
the division of profits between the labourer and the employer, and exactly what constitutes
a level of wages that is 'consistent with humanity'. In both cases each side would have a
very different view of what is fair and necessary, so that conflict would result in order to
reach a balance of interests.

Yet conflict in Smith's model is not restricted to the economic sphere only, but is also
political in nature. This arises in part from the economic competition itself. This occurs as
those individuals who share the same economic interests, combine to enhance their ability
to serve their shared interests. Again, Smith uses the example of employers and labourers
forming combinations in order to either lower or raise wages.5 These combinations are
formed in order to exert power over the other side. As such, the forming of combinations
is clearly a political act, as their purpose is to promote the interests of a particular group in
society, over the interests of other groups. Moreover, such combinations would not be
restricted only to employers and labourers, as other individuals with shared interests would
be forced to combine in order to compete with the combinations. In such a system, failure
to combine would see their ability to compete for economic or political power seriously
undermined. In effect, what a society based on the ideology of competition does is
oversee, and allow for, the creation of new classes and groups, which would then compete
with the old classes and groups over the distribution of national wealth and power.
Inherent in the rise of new social groups is social conflict, as the new groups try to position
themselves in the social order, and the older existing groups resist the change to the social
order.

In this way economic competition becomes political competition between competing
groups, with each group's interests being to some degree the opposite to the other groups.
Conflict would then take place between the different groups at the ideological level, as
each group attempted to have its interests accepted as the main interests of society. Smith
uses the example of merchants and master manufacturers, who in his time, were trying to
promote their interests as "the interest of the public."6 That group which was able to have
its interests accepted as the general interest of the society would, from a Gramscian
viewpoint, be the hegemonic group in society. It would then gain political, economic, and
other benefits to serve its interests at the expense of the other groups. While it would
obviously be against the interests of the other groups for this to occur. Smith shows this
clearly when he writes:

The masters, being fewer in number, can combine much more easily; and the law,
besides, authorises, or at least does not prohibit their combinations, while it
prohibits those of the workmen. We have no acts of parliament against combining
to lower the price of work; but many against combining to raise it.7

With so much at stake for both the winners and losers, conflict between the competing
groups becomes inevitable, as each strives both to promote its interests and gain as much
economic and political power as possible, while defending its existing position against the
interests of the other groups.

Such conflict does become inevitable in the social model Smith promotes, because
of its heavy emphases on the idea of competition itself, and from the emphases on
self-interest. The idea of competition and a competitive society is seen by Smith as a
social good. Smith writes:

In general, if any branch of trade, . . . be advantageous to the public, the freer and
more general the competition, it will always be the more so.8

Yet to Smith, competition did not mean anarchy, where people were free to act in
ways that endangered the whole of the social order. Rather, competition was to take
place within the structure of the market economy, where freedom and self-interest were to
be determined, and limited by, the individual outcomes of the operation of the market
system. In other words, people's choices would be constrained by their self-interest in not
acting in ways that would harm them financially.9 The problem with this is that it assumes
that everyone else sees their interests mainly from an economic perspective.

Nevertheless, if competition is a good thing for the economy, then it can be argued that
it would be good for many other aspects of society also. An ideology that sees
competition as a virtue is bound to see it extended into other parts of the society, including
the political arena. It is reasonable for groups that are free to trade in a free market
economy, to seek those same freedoms in the political sphere, in order to protect and
enhance their economic position. Therefore, as the ideology of competition is extended
throughout society, the more likely conflict is to emerge; as each individual, group, and
class, finds that it must now compete with all the others for its share of the distribution of
national wealth and power. When this is combined with Smith's belief that people act only
in their own self-interest, then the competition to acquire economic and political power,
which can only come at the expense of others, is bound to cause significant and continual
conflict throughout the society.10 This becomes clear when it is remembered that in any
competition there are always more losers than winners, and no one ever wants, or
chooses, to be on the losing side.

In conclusion, a society based on the concept of competition is bound to have
significant conflict within it. If the basis of this society is a free market where all are free to
pursue their own economic interests, then it stands to reason that there will be winners and
losers from such a competitive system. Since none of the competitors will want to be the
losers, as this would clearly be against their own self-interest, there is bound to be conflict
between all the diverse and separate interests of the competitors. It makes sense for all
those with the same or similar interests, to combine their efforts in order to gain the power
to both secure their own interests, and to undermine and defeat the interests of their
competitors. Individual competition then, becomes political competition and conflict, as
the newly emerging groups challenge the existing groups for hegemony over the society and
its wealth and power structures.

Clearly, conflict stands at the heart of such a competitive social system. In such a
system it is economic power that would give political power, and where the attainment of
political power would enhance the group's ability to increase and protect its access to
wealth. Competition over who gets what would undoubtedly lead to a conflict of interests.
Since no individual or group is likely act against their own interests, which according to
Smith is determined by the operation of the market economy, then conflict, at least in the
economic and political spheres, is likely to be a constant element of social relations in such
a social model.

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Endnotes:

1. A. Smith, The Wealth of Nations, London: Penguin Books, 1997, p .134 .

2. M. Haralambos, & R. Van Kriekan, & P. Smith, & M. Holborn, "Sociology:

Themes and Perspectives", in Readings: Introduction to Sociology 1,

Prepared by The Department of Sociology, University of Western Sydney

Macarthur, 1997, p. 51.

3. Smith, op. cit., p. 170.

4. Ibid., p. 174.

5. Ibid., pp. 169 - 170.

6. Ibid., pp. 358 - 359.

7. Ibid., p. 169.

8. Ibid., p. 429.

9. Ibid., p. 424.

10. Ibid., pp. 118 - 119.

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REFERENCES:

Smith, A. 1997. The Wealth of Nations. London: Penguin Books.

Haralambos, M. & Van Kriekan, R. & Smith, P. & Holborn, M. "Sociology:

Themes and Perspectives". in Readings: Introduction to Sociology 1.

Prepared by The Department of Sociology. University of Western Sydney

Macarthur. 1997. pp. 45 - 68.

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