Abstract
Adam Smith’s concept of division of labor is an inexhaustible fountain for evolutionary ideas in economics. It not only enhances productivity and generates diversity but also gives birth to the peculiar institution of money and capital. Under capitalism, the transaction between employer and employee reflects the relationship between the class of capitalists and that of workers. Its result depends on the strategies and resources of both sides. However, each class is not always united; the distribution of the members within each class must be considered. This chapter further discusses collective action in the form of “voice,” along with its relationships to another type of action, “exit.” In several cases, “voice” and “exit” are incorporated into the institution as a tool of “governance.”
Kiichiro Yagi, The Development of the Market Economy and the Formation of Voice, in G. M. Hodgson, M. Itoh, N. Yokokawa (eds.) Capitalism in Evolution: Global Contentions – East and West, 2001, pp. 48–59. Edward Elgar Publishing Ltd. (Partly used in Sects. 4.1 and 4.2).
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Notes
- 1.
Darwin read the sixth edition of Malthus’s Essay (Malthus 1826). Several studies address the significance of Malthus’s reading for the formation of Darwin’s theory. Many of these works opine that Darwin could have developed his theory even without the stimulus given by Malthus.
- 2.
- 3.
The title of Chapter 3, Book 1, of The Wealth of Nations (Smith 1976a, p.21).
- 4.
Whether Smith’s theory of division of labor can account for the concept of diversification, including new activities and new goods, may be controversial. However, if the types of divided labor were to be limited to the activities that previously existed in the undivided labor, the progress in productivity would remain miserably feeble.
- 5.
On this second theorem and its relation to the factory division of labor, see Negishi (1989, p.98).
- 6.
This type of division of labor is designed for efficient production by the employer and was analyzed by Charles Babbage (1832), a friend of Darwin. The nature of the organization principle of the factory division of labor is “designed” rather than “evolutionary.”
- 7.
The original German term is Absatzfähigkeit. The translator of Menger, K. (1892) coined the term “saleableness” as the English equivalent.
- 8.
Compared with the strategy that permits the coexistence of direct and indirect exchange, this radical introduction of the indirect change is vulnerable when the marketability or acceptability of the means of exchange is weak or suffers uncertainty. However, in cases where these difficulties are solved so that people wholeheartedly accept the introduction, it can succeed.
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Yagi, K. (2020). Institutional Dynamics of the Capitalist Market Economy. In: Yagi, K. (eds) From Reproduction to Evolutionary Governance. Evolutionary Economics and Social Complexity Science, vol 20. Springer, Tokyo. https://doi.org/10.1007/978-4-431-54998-7_4
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