The Link Between Capital Accumulation and Increasing Wages in an Updated Version of Smith’s Theory of Population

Abstract

The aim of this paper is to focus, within Adam Smith’s system of thought, on the various aspects of the twofold link between the accumulation of capital and the demand for labor, on the one hand, and between an increasing population and increasing wages, on the other. This link is examined, first, in the light of the relationship between the principles of self-interest and competition; and, second, in support of the possibility that the long-run supply of labor may fall short of the long-run demand for it. The paper’s main argument is that this possibility is peacefully implemented in advancing economies by the “uniform, constant, and uninterrupted effort of every man to better his condition,” which lies behind a continuous process of capital accumulation and technical progress along with the birth control techniques so widely used in our times.