Capitalism in Evolution

Capitalism in Evolution

Global Contentions – East and West

Edited by Geoffrey M. Hodgson, Makoto Itoh and Nobuharu Yokokawa

Contributors to this volume argue that to understand capitalism in evolution, this diversity of systems and approaches must be taken into account and their individual evolutions analysed. This book represents a major understanding of the evolution of capitalism in the twenty first century and brings together a distinguished group of experts with perspectives from America, Europe and Japan.

Chapter 4: The development of the market economy and the formation of voice

Kiichiro Yagi

Subjects: economics and finance, institutional economics


Kiichiro Yagi THE SMITHIAN THEORY OF THE DIVISION OF LABOUR In developing his theory of natural selection, it is well known that Charles Darwin was inspired by Thomas Malthus’s Essay on the Principle of Population (1798). Darwin extended the necessary struggle for life from Malthusian population theory to the zoological and botanical spheres. But another element of natural selection, the generation of diversity, is missing in Malthusian theory. Accordingly, some researchers seek another inspiration for Darwinian theory in the classical idea of the division of labour. Although there is no evidence of Darwin reading Adam Smith’s Wealth of Nations (1776), Darwin was acquainted with the idea of ‘division of labour’ as this idea was familiar to his contemporaries (Hodgson, 1993, ch. 4). We shall not go into the entangled relations between biology and economics here. But it is possible to regard Smith’s theory of the division of labour as an origin for evolutionary economics. Consider Smith’s discussion of the diversity of types of dogs in Book I, Chapter 2 of the Wealth of Nations. The strength of the mastiff, the swiftness of the greyhound, the sagacity of the spaniel, or the docility of the shepherd dog are almost all the result of artificial crossbreeding and selection in successive generations, to make them suitable for guarding, hunting, petting or shepherding. According to Smith, in the case of the division of labour among men, the difference in the original constitution of the mind and body is rather small. But once they...

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