Via John Gruber, here is a striking series of photographs of workers in toy factories in China. I wish I had seen them yesterday, because this morning I did a midterm review in my social theory course and, in quick succession, students asked me about Smith’s idea of the invisible hand and about Marx’s concept of commodity fetishism.
Smith argued that the specialization encouraged by a market system not only liberated people from material want but also freed them from having to spend all their time being “butcher, baker and brewer” for themselves. The two effects were intimately related. He used the example of a day-laborer’s wool coat, cataloguing some of the hundreds of people who directly or indirectly contributed to its manufacture and sale. “The shepherd, the sorter of the wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their different arts in order to complete even this homely production …” One implication of Smith’s view is that we won’t much enhance our personal freedom by trying for material self-sufficiency, or by learning how to do everything for ourselves. Rather, the sort of freedom we want is something that flows from becoming deeply enmeshed in and dependent upon an ever larger and more specialized system of production and exchange of commodities for money. Without it, we would spend all of our time trying to feed and clothe ourselves, with indifferent results. The market frees you from a vast amount of tedious work by allowing you to buy the results of the much more specialized labor of others and granting you huge opportunity benefits in the process—the benefits that flow from not having to do all the other things necessary for survival.
Marx agrees with Smith on the benefits of large-scale production. He had as little desire to return to for “the idiocy of rural life” as Smith had for the lonely farms of the Scottish highlands. Marx also agrees that a central feature of market exchange is that people do not have to personally produce the things they consume, or give any thought to the people who do make those things. But for Marx, this is perverse in the extreme. All those people completely disappear from view as human beings. The market system draws a veil between producers and consumers (and also between producers and the products of their own labor). The exchange of goods for money in the market effaces social relations between real people. Instead, we see—and become fixated upon—the outward manifestations of those relationships, namely the price of the goods and the money used to buy them. Those things are just manifestations of real social relations. In a capitalist system, Marx thought, these actual relationships are exploitative and bizarre in their own way. But in addition to that, the system of exchange means we also lose sight of the web of people engaged in producing these goods, and our own place in that web. And that is commodity fetishism: “the social character of men’s labour appears to them as an objective feature stamped upon the product of that labour.”
The factory photographs are a window into both visions of the market. They are also a reminder that the two views are intimately related. In the Smithian picture, the existence of places like this is precisely what the invisible hand makes possible—it’s the whole point of specialization and a large free market. When Smith’s intellectual descendants want to emphasize the many benefits of market coordination, they typically begin with a vignette that makes the same point as the example of the day-laborer’s coat. For example, Paul Seabright’s excellent The Company of Strangers begins with the question, “How did the world know I needed to buy a shirt today?” Charles Wheelan’s Naked Economics asks “Who feeds Paris?”
These examples are intended to be revelatory. These writers want to draw back the veil, to reveal the complex system of production, exchange, and coordination that lies behind a simple purchase, and to show people how their everyday livelihood is dependent on a preposterous number of other people, essentially all strangers concerned mostly for themselves. On the Marxian view, the fact that such examples are counterintuitive in the first place is the way in to understanding the real problem. Normally we give no thought to the real invisible hands rendered invisible by the invisible hand of the market. Neither do we consider the substance of our relationship to them independent of the prices we pay for whatever it is we buy. For Smith, that’s the power of the market. For Marx, it’s the fetishism of commodities.