Adam Smith’s Agricultural Paradox

According to Adam Smith, classical economist, in his Wealth of Nations,


In agriculture, the labour of the rich country is
not always much more productive than that of the poor; or, at least, it
is never so much more productive, as it commonly is in manufactures. The
corn of the rich country, therefore, will not always, in the same degree
of goodness, come cheaper to market than that of the poor. The corn of
Poland, in the same degree of goodness, is as cheap as that of France,
notwithstanding the superior opulence and improvement of the latter
country. The corn of France is, in the corn-provinces, fully as good,
and in most years nearly about the same price with the corn of England,
though, in opulence and improvement, France is perhaps inferior to
England. The corn-lands of England, however, are better cultivated than
those of France, and the corn-lands of France are said to be much
better cultivated than those of Poland. But though the poor country,
notwithstanding the inferiority of its cultivation, can, in some
measure, rival the rich in the cheapness and goodness of its corn, it
can pretend to no such competition in its manufactures, at least if
those manufactures suit the soil, climate, and situation, of the rich
country. The silks of France are better and cheaper than those of
England, because the silk manufacture, at least under the present high
duties upon the importation of raw silk, does not so well suit the
climate of England as that of France. But the hardware and the coarse
woollens of England are beyond all comparison superior to those of
France, and much cheaper, too, in the same degree of goodness. In Poland
there are said to be scarce any manufactures of any kind, a few of those
coarser household manufactures excepted, without which no country can
well subsist.

-In fact, France was substantially less physically productive in agriculture than England in the eighteenth century, and Poland was a bit more productive in agriculture than France. This paradox of agriculture applies even unto this day, with America, which has much higher agricultural productivity than, say, Russia, also having much higher agricultural product prices than Russia. This is due to labor costs in the U.S. being much higher than in Russia (by roughly five to tenfold in nominal terms), while the difference in physical output per worker in agriculture is much smaller. This is because a typical American worker has many more options than a Russian one, leading to farms paying much more to attract workers in America. However, the prices of tropical food products (quality-adjusted) may well be a little higher in Russia than in the U.S. due to PPP being much more likely to apply to tradeable goods.

Author: pithom

An atheist with an interest in the history of the ancient Near East. Author of the Against Jebel al-Lawz Wordpress blog.

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