Adam Smith on Market Changes, Efficiency, and How to Fire Employees

Adam Smith understands that markets do and must churn as supply and demand and free trade move, but he also importantly argues for measures that make these changes more bearable for workers, like implementing changes gradually and eliminating privileges and regulations that unduly benefit or insulate the powerful. 

 

One of the main initiatives of the Trump administration has been to promote government efficiency through a department led by Elon Musk. One might think Adam Smith's writings as some of the first on modern markets would provide support for such an initiative. Yet, while Smith certainly praises the efficiency of the division of labor for increasing productive capacity and decreasing the cost of production and therefore of goods (WN I.i.5), he is not so sanguine about cutting jobs quickly for the sake of efficiency. Smith notes that demand for goods and services will change based on the needs of any society and therefore that some jobs may need to be cut, but he proposes a very different process than the one reportedly being pursued by the Department of Government Efficiency (DOGE).