Adam Smith on Relations of Subordination and Personal Incentives

The aim of the first part of this paper is to analyse the role of institutions in Smith's thought, with special emphasis upon the reciprocal relations which link together individual behaviour, the evolution of property rights, relations of subordination and personal incentives up to the agricultural stage. In this context Smith points out the exclusive role performed by personal incentives in increasing labour productivity, a role which is consistent with his manifest preference for the figure of the "independent small-scale proprietor". The second part of the paper is devoted to analysis of the same topic with specific reference to the emergence of the stage of commerce. In this new context we note a change of paradigm due both to the pervasive role of the division of labour in increasing labour productivity, and - as a by-product of this change - to the emergence of a new form of relation of subordination.