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Smith explicitly disagrees: A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation. https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/... Smith also writes at length of the power imbalance between business owners and employers, who can and do collude to keep down labour wages, whilst labour has far less power (and in his time, no legal right) to organise to raise them. Of the inherent inequality and dangers of piecework pay. And of the differential returns to various economic goods and activities, particularly wages, commodities, rents, interest, assets (to Smith, gold and silver), and public goods. More recent economic understanding is that the marginal cost / marginal price, and differential risk / consequence dynamics of such interactions provide distinct behaviours and advantages to specific powers. The inherent imbalance between wages (tending to subsitence, or below) and rents (tending to all consumer surplus for the producer), create an inherent conflict. Then there are the problems of corporate ownership and behaviour (roundly criticised by Smith in the form of join stock companies), the corporatisation of violence ("Regulated companies, it was observed by Sir Josiah Child, though they had frequently supported public ministers, had never maintained any forts or garrisons in the countries to which they traded; whereas joint stock companies frequently had", and general collusion of commercial interests against those of the common weal. The passage I'd previously cited ties wages largely to economic growth, stagnation, or decline, and the story it paints is both stark and well worth consideration. |
I'm well aware that Smith on occasion argues for protectionism to "smooth out" that extinction process. That's welfare. It has no bearing on fair prices in free trade.