– William Gibson and Bruce Sterling, (1990) The Difference Engine.

In Smith Effect I, the argument is made that Adam Smith’s writings contributed to a set of intellectual movements that located a nation’s wealth in its population rather than the familial structure of the monarch and its treasury.

Drawing on Michael J. Shapiro‘s Reading “Adam Smith” (2002), I argue that this reconceptualization created a trajectory for the development of new information practices and technologies. Not only did Smith’s writings contribute to an understanding of “market forces” and the importance of labor, but the new emphasis on the population for a nation’s wealth provided the intellectual foundation for a transformation of the census, an ancient political tool, into a wide field of measurements that came to be called statistics (“state-istics”), the science of numbers in service of governing the nation-state. This turn led directly to creation of information machines and, ultimately, electronic digital computers.

The Smith Effect therefore provides a unique opportunity for analyzing the roots of modern society’s reliance on information technology (IT) and how these tools and practices have been integrated into a wide array of corporate and governmental bureaucracies.

Written about the time of America’s revolution, Smith’s ideas became the foundation of economic thought in the West and a major contributor to the characterization of the modern state and its role in the liberalization of the political economy. Reflecting the preoccupation of the time, Smith’s point of departure for his analysis of the economy was sovereignty. But rather than negate it, he reconfigured it. The authority of the state was no longer seen simply concerned with the maintenance of a ruling power, but also with its productive capabilities and with the wealth of a realm’s inhabitants.

Due to Smith, sovereign power was increasingly seen as a steering mechanism that could guide the flows and collaborations of social activities towards increasing the overall wealth for the nation. The energies of the population could be mobilized in a way that takes advantage of the social propensities to barter, exchange and accumulate. In Smith’s wake, governmental bureaucracy expands and takes on increasing demands in terms of textualizing, aggregating, calculating, and interpreting information about the economy and the population which was beginning to be considered an integral component of a nation’s wealth.

The origins of this new field of governmental calculation were first articulated in a chapter of the German Baron J. F. Bielfeld‘s Elements of Erudition in 1787. Entitled “Statistics,” it announced the endeavor as the “science that teaches us what is the political arrangement of all the modern states of the known world.” Bielfeld discussed the emergence of the field in Germany and its objective to chronicle the “noteworthy characteristics of the state” and to analyze the major powers in the world, including their citizens, industries, and governmental decisions.[1]

While initially concerned with categorization and verbal descriptions, by the beginning of the next century these descriptions were largely replaced by numerical data and calculation. This new enthusiasm for calculation led to the publication of a number of books and the participation of many “societies” in the task of producing lists of numbers.

By the time of Charles Babbage, generally considered the father of computing, numbers had become a major preoccupation in some social circles. Babbage published On the Economy of Machinery and Manufacturers in 1832 that established his credentials as a political economist in the lineage from Adam Smith to John Stuart Mill and Karl Marx. His analysis of factories drew on Smith’s analysis of pin manufacturing and the role of division of labor and specialization. It was also crucial for Marx’s predictions on the “means of production.”

More relevant to this thread, Babbage was a strong advocate of the value of numbers, calculation, and tables. He urged the publication of more books on numeral constants. Hacking: “Babbage had twenty kinds of numbers to be listed. They begin with familiar enough; material, astronomy, atomic weights, specific heats and so forth. They quickly pass to the number of feet of oak a man can saw in an hour, the productive powers of men, horses, camels, and steam engines compared, the relative weights of the bones of various species, the relative frequency of occurrence of letters in various languages.” With this new fascination with numerical calculation, statistics went beyond just the calculation of government revenues and assets to be used in a wider range of societal and political computations.[2]

The “avalanche” of algebraic numerals diffused calculative and listing capabilities throughout a number of social domains. As bureaucracy was in its infancy, it was initially more pronounced in the universities and societies, in areas such as epidemiology, genetics, and political economy. World statistical organizations convened such as the Manchester Statistical Society and the Statistical Society of London, which included such members as Thomas Malthus, generally considered to be the one who put the “dismal” in the “dismal science” of economics due to his dire prognostications about population and agriculture.

Dialogues on statistics were from their earliest beginnings, politically charged discourses. Of great importance to the members of these societies was “the condition of the people,” as statistics became an important part of the social reform movements that accompanied the trials of industrialization.[3]

Calculations took a new turn in the wake of Smith’s contribution. The use of “political arithmetic” for the mercantile state had a long history in the area of taxation and finances as it concerned itself with the internal affairs of the state and the monitoring of wealth extracted from its empire. During the nineteenth and twentieth centuries, however, the state turned towards registering information on their populations. This includes the “centralized collation of materials registering births, marriages and deaths, statistics pertaining to residence, ethnic background and occupation; and what came to be called by Quetelet and others ‘moral statistics,’ relating to suicide, delinquency, divorce and so on.”[4] It also shows in the Belgian census of 1840s, which would go on to become the international model as countries learned from each other the techniques of constructing a numerical representation of its population and also used these numbers to compete for national status.[5]

The new focus on population in the late 18th century led directly to the emergence of a series of knowledges for constructing, reading, and acting upon this problem. Numbering for the state, or “statistics,” emerged as a formative knowledge in the construction of government practices. Bureaucracies expand and officials are put to use in collecting the new information. The comprehension of the population as the new source of national wealth and as the focus of administrative activity called forth new languages, many utilizing alphanumeric figuring.

Based on the elevation of the alphanumeric notation system as the quantitative rhetoric of reality (from the old French term real , the space controlled by royalty), statistics developed as a state instrument for social surveying and has consequences for both the constitution of the population, and according to Foucault, new forms of “governmentality,” including the elaboration of political economy as a new discipline of measuring a nation’s wealth.

Statistics provided a new view of the economy and society. No longer could the family serve as a viable model of economic accumulation and social governance. The family instead becomes part of the demographic realm to be studied and calculated. Foucault elaborates:

Whereas statistics had previously worked within the administrative frame and thus in terms of the functioning of sovereignty, it now gradually reveals that population has its own regularities, its own rate of deaths and diseases, its cycle of scarcity, etc.; statistics shows also that the domain of population involves a range of intrinsic, aggregate effects, phenomena that are irreducible to those of the family, such as epidemics, endemic levels of mortality, ascending spirals of labour and wealth; lastly it shows that, through its shifts, customs, activities, etc., population has specific economic effects: statistics, by making it possible to quantify these specific phenomena of population, also shows that this phenomenon is irreducible to the dimension of the family.[6]

By the late nineteenth century, frustration with manual methods of compiling statistics was rising. Despite increasing loads and classification projects; pencils, pens, and rulers were still the main tools for classifying, calculating, and summarizing work sheets into journals and ledgers. The United States started to look for alternatives after running into difficulties tabulating the 1880 census. It was required by the US Constitution to keep a register of the population and was desperately trying to keep up with the large-scale immigration of the late 19th century. The Census Bureau could not keep accurate track of the growth and by 1887 was desperately soliciting ideas to help them complete the 1880 census. The solution would be mechanical and lead to the formation of International Business Machines (IBM).

Preview of the Smith Effect III: The Census and the Rise of IBM

From the eighteen-century, changes start to occur in the way state sovereignty is generally construed. Mercantilism, which did much to apply the new calculating rationality and arts of government for the welfare of the monarchical state, began to give way to an even broader application of political practices involving the collection and calculation of information. Whereas the instruments of the state under mercantilism worked to increase the wealth of the ruler, the new practices and knowledges of the state paid increasing heed to the newly conceived problem of population. The rigid framework of sovereignty that had been previously modeled on the patriarchal family begins to confront an increasing money supply, new numerical techniques allowing demographical accounting and the expansion of agricultural and goods production.

But it was the American census that provided the most immediate relief for the problems associated with aggregating large amounts of statistical data. Mandated by the US constitution to be held every 10 years, its calculation ran into difficulties as immigration soared in the late 19th century. By 1880, the task was nearly impossible to complete before the next one was due. The solution was the “census machine” and it changed the trajectory of both corporate and governments bureaucracy as well as the information practices that run them.

Statistics: The Calculating Governmentality

This section follows the thesis that Adam Smith’s new conception of the wealth for nations created the impetus for the development of statistics and other information collecting and calculating technologies. This new direction of political economy from one based on governmental wealth to the vitality and enterprise of its population led to continual interest and innovations in information practices. The United States Constitution, written in 1787 and ratified in 1788, was influential as it required a census every ten years. This lead to Herman Hollerith’s tabulating machines created for the 1890 US Census.

Hollerith’s company merged later with two other companies to form International Business Machines or IBM. IBM began to sell its tabulating machines and customized census services to countries like Russia and then later, Nazi Germany. The punch-card tabulating systems were then generalized for a wide range of commercial and government purposes, including monitoring racial politics as well as parts management for the Luftewaffe, Germany’s air force.

Notes

[1] Notes and quotes from Statistics and Society: Data Collection and Interpretation (1991) by Walter Theodore Federer. CRC Press.
[2] Hacking, I. (1991) “How should we do a history of statistics?” in Burchell, G., Gordon, C. and Miller, P. (eds.) The Foucault Effect: Studies in Governmentality. (Chicago: University of Chicago Press). p. 186. Babbage, Charles. On the Economy of Machinery and Manufacturers. London: Charles Knight, 1832.

[3] Manicus, P. (1987) A History and Philosophy of the Social Sciences. (Oxford: Basil Blackwell). p. 196 197. See also Poovey, M. (1993) “Figures of Arithematic, Figures of Speech: The Discourse of Statistics in the 1830’s,” CRITICAL INQUIRY. Winter, Vol. 19, No. 2.
[3] Hacking, I. (1991) “How should we do a history of statistics?” in Burchell, G., Gordon, C. and Miller, P. (eds.) The Foucault Effect: Studies in Governmentality. (Chicago: University of Chicago Press). p. 182.
[4] See also Bruce Curtis’ The Politics of Population: State Formation, Statistics, and the Census of of Canada, 1840-1875. (2002) University of Toronto Press.
[5] Foucault, M. (1991) “Governmentality,” in Burchell, G., Gordon, C. and Miller, P. (eds.) The Foucault Effect: Studies in Governmentality. (Chicago: University of Chicago Press). p. 99.

Citation APA (7th Edition)

Pennings, A.J. (2010, Sept 06). The Smith Effect II: “State-istics,” Calculating Practices, and the Rise of IT. apennings.com https://apennings.com/dystopian-economies/the-smith-effect-ii-from-political-arithmetic-to-state-istics-to-it/?preview_id=1033&preview_nonce=c51b6b9b63&preview=true

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Anthony J. Pennings, PhD is a Professor at the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University where he taught comparative political economy, digital economics and traditional macroeconomics. He also taught in Digital Media MBA atSt. Edwards University in Austin, Texas, where he lives when not in the Republic of Korea.

Anthony J. Pennings, PhD has been on the NYU faculty since 2001 teaching digital media, information systems management, and global political economy.

Category: dystopian economies, the smith effect
Tags: Adam Smith > Baron J. F. Bielfeld > census > Charles Babbage > Manchester Statistical Society > Michael J. Shapiro > political arithmetik > Reading "Adam Smith" > state-istics

The Smith Effect I: Markets, Governments, and the Rise of Information Technologies

Posted on | August 30, 2010 | No Comments

This is the first in a three part exploration of Adam Smith and how his ideas laid the foundation for modern information technology (IT)

In his book, Reading “Adam Smith” (2002), Michael Shapiro states that because of Adam Smith’s contributions, “he is always at least implicitly present when one negotiates modernity’s codes and arrangements.” What he means is that not only have Smith’s writings become richly woven into the fabric of modern thought, its economics, its philosophies, but also its government and economic institutions.[1] Shapiro’s “Smith Effect” can be used to understand the influence Adam Smith has had on both the modern emphasis on economic markets as well as the role and the growth of government. Integral to both these processes has been a wide range of information management imperatives that have spurred the development of computers and communications technologies.

Smith wrote his classic text, An Inquiry into the Nature and Causes of the Wealth of Nations (1776), commonly known as The Wealth of Nations, in a time when much of modern thought was being introduced and discussed. Intellectuals in the 18th Century were obsessed with challenging the reigning political authority and the basis from which it derived its political legitimacy, namely a vertically oriented, religion-based ruling system. For example, while the emerging United States of America would remain one nation “under God,” it instituted a set of horizontally oriented checks and balances based on the machine metaphors of the nascent industrialization age.

Smith took aim at the hierarchically oriented mercantile structure that was characterized by a governing sovereignty that derived its authority from the rhetoric of divine origins. His book became a major force in the liberalization of this ruling structure. In the process, he helped create the impetus for a new rationality that would change modern government and how the economy was viewed. This new rationality would both liberalize the economy and draw nations into a new type of governance, the management of populations.

From Treasure to Laboring Energies

European monarchies maintained a strong grip on the land and their subjects by invoking a privileged place in society. By claiming divine legitimacy, they justified their positions in a stationary order. Consequently, early imperial mercantilism conceived of wealth as static hoarding for the monarch and feudal lords, not as a process of dynamic practices involving the enterprise of labor and capital investment, as Smith would later argue. In challenging this organization, Smith’s writings helped “recast divine will as a set of dynamic mechanisms regulating the process of production.”[2]

His argument was based on the protest ideas of the time, which challenged the Catholic church’s role and their teachings that God could be petitioned to intervene in worldly affairs. For Smith, divinity was infused in earthly nature and demonstrated by the harmonious order of economic markets based on human desiring. Smith was particularly comfortable with using musical metaphors to talk about the workings of the economy. Markets ensured the harmonious working of the world as long as those involved worked to their own benefit. In making this philosophical and political leap, Smith helped shape the moral, political, and social dimensions which have become integral to modern capitalist political economies.

Smith’s often-quoted “invisible hand” was mentioned only once in the Wealth of Nations. Still, it has continued to function as powerful currency for his train of thought that relocated the problem of wealth from the realm of the sovereign purse to the processes involved in economic production. For Smith, the nation’s wealth was not what could be accumulated for the monarch but rather the sum of goods and services that were available per capita for the population.

Hailing from Scotland, on the periphery of the British kingdom, Smith objected to the hoarding mercantile practices of the English monarchy because it made the people he saw poorer. Smith’s writings were significant because he located value in the act of production and in the creative and energetic expenditures of laboring people, not the result of amassing wealth.

Adam Smith set the stage for Karl Marx, not one of his direct students, but certainly one of his most dedicated. What intrigued Marx was that Smith conceptualized the plight of laboring bodies. This meant that Smith, “shifted the focus from national rivalries to the conditions of work, thereby helping to enfranchise a neglected constituency, the working poor, and to draw them into a new conversation on problems of inequity, a conversation which could not be held with the old mercantilist conversation on value.”[3]

In doing so, Smith intellectually recognized the working population and helped transgress certain prejudices against working activities and those engaged in them. As Zuboff argued, “The Middle Ages produced a conception of labor infused with a loathing drawn from three traditions: (1) the Greco-Roman legacy that associated labor with slavery, (2) the barbarian heritage that disdained those who worked the land and extolled the warrior who gained his livelihood in bloody booty, and (3) the Judeo-Christian theology that admired contemplation over action.” Smith’s new intellectual negotiations set the stage for empowering labor and a historic wealth boom based on new types of industrial production and the distribution of affluence among the classes.[4]

The “Invisible Hand” and the Escape from History

To better understand the “invisible hand,” one of modernity’s most prevalent truisms, it is vital to examine Smith’s philosophy of religion and nature. Smith conceived of God as the “Author” of the world, but one that had retreated from the day-to-day world and left behind a structural guarantee that the self and the social order would remain attuned. This guarantee is a form of human desiring we call “enterprise” at its best and “greed” at its worst.

Smith’s upbeat version of the world was one that resulted in an aggregated “harmony” when individuals followed their passions. Shapiro explains, “Among what Smith’s ‘Author’ had left behind as “nature” was the regulative mechanism of a socially felicitous tendency in individual human desiring, which along with some inevitable tendencies in collective arrangements, would eventuate an order that progressed toward general prosperity and broadly distributed human contentment.”[5] What has become commonly known as the “market” was Smith’s divine mechanism that was “infused in nature” to produce a harmonious aggregate outcome when individuals act on their passions.[6]

The “Smith Effect” provides an opportunity for new ways to analyze the social field and the overlap between economic, social, and political spheres. Smith was a crucial critical theorist in his rejection of mercantile thought, and his writings were a forerunner of modern political economy. Two major bodies of economic analysis would emerge from Smith’s writings.

One was the classical liberal tradition that combined Smith’s anti-mercantile stance in favor of “markets” with an increasing emphasis on empirical and quantitative calculation. This stance focused largely on theoretically reconceptualizing Smith’s divinely gifted “invisible hand” in terms of more naturalistic and physics-derived metaphors.

One such metaphor was “equilibrium” that allowed political economy “to escape from history.”[7] By focusing on economic tendencies to revert to one price among many competitors, economics was able to devise a theoretical system that could marginalize historical events and focus exclusively on modelling forces of supply and demand. Economic, or market equilibrium was conceived as a condition or state in which economic forces become balanced. This philosophical foundation informs mainstream liberal economics in both Keynesian and Monetarist (Austrian) traditions.

The other body of analysis was the Marxist tradition that drew its investigation from Smith’s concern for the worker and the processes of valuing commodity forms and accumulating capital. This latter posture organized the history of the economy around the role of labor and its role in the “mode of production.” Class struggle between laboring forces and capitalist owners drive the ebb and flow of history. Marx combined Smith’s political economy with German dialectical philosophy and French utopian theory to create a unique and radical analytical perspective.

These two ways of viewing the political economy helped shape the next few centuries. This included the classic division during the Cold War as the West developed a form of capitalist industrialization based on the New Deal’s negotiated relationship between government and business. In the “East,” forms of state-controlled communism emerged in China, Cuba, North Korea and the USSR. In the 1970s, liberalism re-emerged in reaction to Keynesian/New Deal macromanagement of the economy as neo-liberalism and once again stressed market forces, particularly in the financial sphere.

While Smith opened up new areas for investigating the economy, it would be a mistake to equate his writings with the anti-state rhetoric of modern neoliberalism. His writings marked not so much the end of the state, or even a way of curbing its power, but rather a way of theorizing the economy so that it could be even more productive for the nation. More than ever, the intervention of the state in the economy was legitimized.

This came about largely because the theoretical conversations he set in motion changed the connotations associated with both the state and the economy. For the former, it meant a state with a powerful new system of calculable observations that could be used to guide its actions. To help with these observations, “political arithmetik” or “statistics” emerged as a focus of knowledge that could record a wide range of demographic and epidemiological events and processes. These new economic and social surveillance techniques provided new ways to scrutinize, and consequently, new ways emerged to intervene in social activities.

Conclusion

Smith wrote extensively on the proper expenditures of the state, including defense, education, justice, public works, the dignity of the sovereign, and institutions for facilitating the commerce of society. For the latter, it meant a redefinition of the economy from that based on the model of a household to a larger set of social activities covering a wide range of laboring activities and entrepreneurial production. While no doubt a significant contributor to modern liberalism and its commitment to international comparative advantage and “free enterprise,” Smith’s writings helped conceive a more prominent role for government in managing the economy, not a smaller one. In the process, calculating tools and information management practices would be created to facilitate this control.

Preview to The Smith Effect II: Calculating Practices and the Rise of IT

Smith’s writings legitimized the state’s intervention in the economy by identifying the crucial role of managing populations for national prosperity. His contention that the natural order channels individual desires into positive collective outcomes helped to open up flows of capital in service of manufactures. It set in motion conversations that changed the connotations associated with the state and the economy.

A body of knowledge known as statistics emerged as a set of techniques for amassing important data on a wide range of demographic information important to the state and the emergence of democratic governance. It provided new economic and social surveillance techniques provided ways to analyze and scrutinize the political economy. Consequently, these new techniques and the indicators they enabled suggested ways to intervene in social activities to improve the conditions and productivity of national populations.

These techniques eventually found mechanical enhancement with the invention of the tabulating machine and telegraphy that were used to collect data from a wide geographical area in service of the wealth of a nation. Herman Hollerith invented the census machine, used to tabulate and calculate the US population in accordance with the specifications of the US Constitution. He went on to form companies that were merged into International Business Machines (IBM), the dominant information machine company of the big computer era and whose personal computer (PC) solidified the market for “microcomputers.”

Notes

[1] Shapiro, M.J. (1993) Reading “Adam Smith”: Desire, History, and Value. p. xxix.
[2] Shapiro, M.J. (1992) Reading the Postmodern Polity: Political Theory as Textual Practice.
[3] Quote on Smith and his perspective on labor. Shapiro in Reading “Adam Smith”. p. xxxi.
[4] Three traditions that influenced the contempt for labor from Shoshana Zuboff’s In the Age of the Smart Machine: The Future of Work and Power. (1988) pp. 25-26.
[5] Smith regulative mechanism left behind by the “Author”. Shapiro, Reading “Adam Smith” p. xxxii.
[6] Shapiro on Smith’s “market”. Ibid, p. 79.
[7] Peter Manicus on equilibrium as the vehicle for political economy’s escape from history. A History and Philosophy of the Social Sciences. Oxford: Basil Blackwell. p. 40.

Citation APA (7th Edition)

Pennings, A.J. (2010, Aug 30). The Smith Effect: Markets, Governments, and the Rise of Information Technologies. apennings.com https://apennings.com/dystopian-economies/the-smith-effect-markets-and-bureaucracy/

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Anthony J. Pennings, PhD is a professor at the State University of New York (SUNY) in South Korea. Previously, he taught in the MBA program at St. Edwards University in Austin, Texas and comparative and digital economies at New York University from 2002-2012. He also taught at Victoria University in Wellington, New Zealand and was a Fellow at the East-West Center in Hawaii in the 1990s.

Category: democratic political economies, digital media economics, dystopian economies, enabling frameworks, enterprise systems, the smith effect
Tags: Adam Smith > Anthony J. Pennings > equilibrium > greed > invisible hand > Karl Marx > Michael Shapiro > The Wealth of Nations

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