Monday, October 22, 2007

Quote of the Day- Adam Smith in 21st Century

By necessaries I understand not only the commodities which are indispensably necessary for the support of life, but whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them. In Scotland, custom has rendered them a necessary of life to the lowest order of men; but not to the same order of women, who may, without any discredit, walk about barefooted. In France they are necessaries neither to men nor to women, the lowest rank of both sexes appearing there publicly, without any discredit, sometimes in wooden shoes, and sometimes barefooted. Under necessaries, therefore, I comprehend not only those things which nature, but those things which the established rules of decency have rendered necessary to the lowest rank of people. All other things I call luxuries, without meaning by this appellation to throw the smallest degree of reproach upon the temperate use of them. Beer and ale, for example, in Great Britain, and wine, even in the wine countries, I call luxuries. A man of any rank may, without any reproach, abstain totally from tasting such liquors. Nature does not render them necessary for the support of life, and custom no-where renders it indecent to live without them.

-Adam Smith,


Gavin Kennedy said...

Adam Smith is discussing ‘Taxes upon consumable Commodities’ as part of his review of taxation in Wealth Of Nations. Incidentally, it was not about him making a case against drinking, beer, ale, or wine! [I speak as an abstainer from alcohol].

His serious point in respect of what constituted the ‘necessaries’ in the annual consumption of ‘necessaries, conveniences, and amusements of life’ (GDP) has relevance when assessing the ‘subsistence’ wage that employers would be deemed to pay in Smith’s ‘model’ of how a commercial economy worked in the 18th century.

It might also be relevant when assessing the distribution of income in the 21st century to determine absolute poverty in a rich economy compared to a developing or non-developing (poor) economy. The contents of the necessaries basket of consumable goods at different levels of development would be different.

Defining a low income family in a rich country as living in intolerable poverty is a controversial subject among policy makers and those who influence them. It would be an interesting exercise for modern economists to estimate along the lines that Adam Smith suggested exactly what would be regarded as the minimum creditable requirement for different income groups in today’s world.

I understand that among certain poorer groups in rich countries, the quality, and presumably the expense, of styled footwear of young adults is a key indicator of what is considered to be respectable and not whether they have footwear at all.

All ‘likenesses’ of Adam Smith show him to be wearing stylish shoes, he also like drinking French claret and Scottish beer, was stylishly dressed (he had his ‘contraband’ shirts burned when he became a Scottish Customs Commissioner in 1778), and he lived frugally. His two indulgences were his library collection and entertaining friends for tea.

Marshall Jevons said...

The quote is also mentioned by Robert Frank, in his little book, Falling Behind, p. 39 (chap.4 Envy or Context)