ON ADAM SMITH AND A THEORY OF TECHNOLOGY

Karol I. Pelc School of Business and Economics Michigan Technological University Houghton, MI 49931, U. S. A.

Abstract: Review of definitions and theoretical works concerning technology suggests that different disciplinary frameworks lead to very different interpretations of that basic term. These interpretations are presented in the literature of such disciplines as economics, philosophy, sociology, psychology etc. In search for coherent background and a model of technology, a study of Adam Smiths (1723 1790) historic works and statements was conducted. A hypothesis is formulated that Smiths economic, social, ethical and legal concepts are relevant to contemporary theory of technology. This connection has been explored. Even though the term technology has never appeared in the Smiths writings, his concepts refer to multiple aspects of technology and its impact on society. These concepts include: barter and exchange, division of labor, arts and manufactures, inventions, patents, and utility. Mapping of those concepts into a set of attributes of technology, as an object of management, is proposed. It is graphically demonstrated and described. Keywords: Adam Smith, technology attributes, technology definition, technology model, technology theory, economics history.

Introduction
Virtually all domains of life in contemporary society are influenced by technology. The term technology is one of the most commonly used words in publications, in official and informal communications, conversations etc. Many institutes, companies and universities include technology in their names. Paradoxically, definition of that term is still unclear, difficult, sometimes confusing. Understanding and definition of technology varies across different disciplines and professional fields. Economists view technology mainly in the context of productivity and utility. For instance the Cobb-Douglas function represents impact of technology on the output of an economic system through a multiplicative index of technical change (Cobb and Douglas, 1928), (Gold, 1982), (Ruttan, 2001). Sociologists consider technology as a phenomenon, which determines relations among people as well as creates opportunities, expectations and threats to society (Cohen, 1983), (DeGregori, 1985). Engineers and system design experts associate technology with special skills, methods and tools, which allow converting ideas into functional and useful products, processes and systems (Girifalco,1991), (Dosi, 1982).

Business executives and business writers are frequently confusing technology with the information technology and, in consequence, many recent business publications apply the term technology as a synonym of information technology (IT). Many managers view technology as a support system for operations of the firm, or as a necessary but risky element of companys expenditures, which is expected to be paid off by novelty of products or services. Concept and definition of technology have been subjects of several philosophical studies (Rapp, 1981), (Durbin and Rapp, 1983), and (Ferre, 1988). Conclusions of those analyses have still not provided a coherent conceptual model of technology. Further interdisciplinary efforts are needed to search for a model that would be theoretically well founded, and practically acceptable. One of possible ways to develop a coherent model of technology is to search for a set of interconnected basic philosophical, social and economic concepts from which a set of attributes of technology could be derived. Such set appears to be available in the historic works of Adam Smith. The purpose of this paper is to analyze possible linkages between Adam Smiths economic, social, ethical and legal concepts, developed in the XVIII century, and the contemporary understanding of technology and its impact on society. It is suggested that those concepts may serve as framework for a model of technology. This attempt to benefit from old concepts is not new in literature. It follows the main line of reasoning, which assumes that it is possible to derive new ideas from dead economists as presented by Buchholz (1989). Before description of the Smiths concepts, a brief review of definitions of technology is presented (in the next section) to demonstrate existing diversity, ambiguity, and conceptual discrepancies.

Definitions of technology
Dictionaries Definitions of technology presented in major dictionaries do not fit together and lead to ambiguity. Three examples are following: The American Heritage Dictionary (1992). Technology [Gk. techne, skill + -logy] ,1. a. The application of science, esp. to industrial or commercial objectives. b. The entire body of methods and materials used to achieve such objectives. 2. (Anthropology) The body of knowledge available to a civilization that is of use in fashioning implements, practicing manual arts and skills, and extracting or collecting material. The Oxford English Dictionary. The Compact Edition (1971). Technology, Greek technologia systematic treatment, from techne art, craft. 1 a). A discourse or treatise on an art or arts; the scientific study of the practical or industrial arts. 1b) Practical arts collectively. 2. The terminology of a particular art or subject; technical nomenclature.

Websters Third International Dictionary (1961). Technology (Greek technologia: systematic treatment) the science of the application of knowledge to practical purposes: applied science, - application of scientific knowledge to practical purposes in a particular field, - totality of the means employed by a people to provide itself with the objects of material culture. Publications on theory of technology Many authors proposed definitions in specific context of their disciplines. In consequence their statements are neither synonymous nor convergent. Some examples of differences are presented below. Economic and engineering context. Dosi (1982) defines technology as a set of pieces of knowledge both directly practical (related to concrete problems) and theoretical (but practically applicable although not necessarily already applied), know-how, methods, procedures, experience of successes and failures and also physical devices and equipment. This extensive definition may still be viewed as incomplete because it does not reflect social and economic properties and impacts. Girifalco (1991) expresses a broad view on technology in a very short statement: Technology is the corpus of knowledge and the set of techniques by which we manipulate and control the physical world to satisfy human wants. Social context. DeGregori (1985) looks at technology as a complex phenomenon in the process of human development. The complexity is reflected in 30 attributes of technology this author identifies and presents in his book. The list begins with the statement that technology is primarily an ideational process; it is the use of ideas to transform the material and nonmaterial world. Two sets of attributes may be distinguished in the list: (1) Characteristics of technology which describe its internal properties and structure, and (2) Characteristics of technology describing its external links and its impact on other domains (Pelc, 1987). Philosophical context. Ferre (1988) applies the word technology as a general term for technologies. The latter being defined as practical implementations of intelligence. This convention is justified further by explanation of what practical implementations mean and what role is played by intelligence. Rapp (1981) presents the evolution of concepts of technology and reviews several philosophical assumptions made by different authors. In his philosophical analysis of technology, the term technology is applied with reference to material technology, which is based on action according to the engineering sciences and on scientific knowledge. Emphasis on action as an essential element of this concept of technology may be related to a more general methodology of effective action processes, called praxiology, which has been developed by Kotarbinski (1965 a, b).

Adam Smiths concepts related to technology

Adam Smith (1723-1790) is most widely known for his theory of economics based on the assumption of dominance of human self-interest and for the related idea of invisible hand that guides peoples behavior and actions. However his area of interest was much broader than economics (Smith, 1982a). He was studying, teaching and writing on many other subjects ranging from philosophy (Smith, 1982b), morality and ethics (Smith, 1982d),) to rhetoric, literature (Smith, 1985) and law (Smith, 1982c). Smith has never used the term technology in his writings but his broad studies, lectures and opinions pertaining to many disciplines of science and arts suggest that he was capable to integrate several aspects of the phenomenon we currently call technology, and to analyze its potential impacts on society. That integration may lead to a more coherent conceptual model of technology than those presented in several mono -disciplinary, specialized studies. It should not be surprising to find that Adam Smiths preoccupation with defining the causes of the wealth of nations allowed him to discover and describe several characteristics of technology. The experience of industrial world during the last two hundred years, after Smith, indicates clearly that technology has become a source of wealth and welfare of societies even though it also creates many threats. A review of Adam Smiths writings allows identifying at least six concepts he used that are linked to the contemporary understanding of technology. Those concepts are presented in the following sections of this paper. Barter and exchange Adam Smith made a fundamental observation concerning human capability to barter, truck and exchange. In his famous book on the Wealth of Nations (Smith, 1982a), originally published in 1776, he describes the propensity in human nature to truck, barter, and exchange one thing for another and emphasizes uniqueness of this human capacity that it is common to all men, and to be found in no other race of animals, which seem to know neither this or any other species of contracts (Smith, 1982a, p.25). This observation may be applied to understanding of technology in its contribution to our capability of conducting exchange of goods and services. Technology broadens the scope and increases the scale of potential market as well as expands the market share. Hence the Smithian concept of barter, truck and exchange may be reflected in the commercial attributes of a technology. A technology may be evaluated in terms of the type and amount of market advantage it provides and, more generally, in terms of expanding and improving the human capability to trade.

Division of labor Concept of division of labor is central to Smiths theory of economic systems. He views it in historical perspective as the greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed or applied. (Smith, 1982a, p.13). Division of labor constitutes a concept of social order and harmony. It also supports the mechanisms of specialization, professionalism and voluntary exchange of goods and services in a society. Technology may be viewed as a consequence as well as a source of diversification in society. A set of social attributes of technology may be derived from this concept. They would allow assessing different social impacts of a technology, and, in general, relative importance of technological assets for a society. Arts and manufacture At the times of Adam Smith the manufacturing industry was in its early stage of development. However he was able to predict several phenomena, which have become critical to the historical success of manufacturing in the next centuries. In his analysis of division of labor and its impact on productivity Smith indicates three elements that are essential for the industrial process engineering until today. These are: improvement of workers skills, time-savings due to proper task assignment, and innovation in tools and machinery based on workers experience. For historical reasons, he was able to use only examples from industries that existed in his time such as the textile industry or the pin manufacturing process to illustrate advantages of process engineering (Smith,1982a, p.15) and (Pratten, 1980). These concepts of manufacturing process design and task-oriented organization of work are closely related to the contemporary engineering/industrial attributes of a technology. Invention Adam Smith refers to invention in several publications. He suggests that there exist three sources of inventions and corresponding three types of inventors. First group are the inventions of common workmen who being each of them employed in some very simple operation, naturally turned their thoughts toward finding out easier and readier methods of performing it. Smith illustrates this type of inventions by an example of a steam-engine valve control system invented by a boy who was constantly employed to open and shut alternately the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions, observed that, by tying a string from the handle of the valve, which opened the communication, to another part of the machine, the valve would open

and shut without his assistance, and leave him a liberty to divert himself with his play-fellows (Smith, 1982a, p. 20). Second group are the inventions made by manufacturers of tools and machines. According to Smith many improvements have been made by the ingenuity of the makers of the machines. (Smith, 1982a, p.21). He also observed that inventions in constructions of machines frequently lead to their simplification. They at first are vastly complex but gradually the different parts are more connected and supplied by one another...The simpler the machine the better... (Smith, 1985, p.13). Third group are inventions made by scientists and researchers. Smith observes that some inventions are due to ingenuity of those who are called philosophers or men of speculation, whose trade it is, not to do any thing, but to observe every thing; and who, upon that account, are often capable of combining together the powers of the most distant and dissimilar objects. Probably, this description is close to contemporary understanding of the function of scientists. Smith explains this function in the following way: In the progress of society, philosophy or speculation becomes, like every other employment, the principal or sole trade and occupation of a particular class of citizens. Like every other employment too, it is subdivided into a great number of different branches, each of which affords occupation to a peculiar tribe or class of philosophers... (Smith 1982a, p.21-22). These statements indicate that Adam Smith not only considered inventions to be the essential source of progress but also analyzed their properties in a way that can lead us today to a definition of cognitive attributes of technology. Patents and Copyright Legal protection of intellectual property has been a subject of several statements of Adam Smith. In his Lectures on Jurisprudence (presented in 1762 66) commented on the usefulness of temporary monopolies granted for inventors and authors of books: The inventor of a new machine or any other invention has the exclusive privilege of making and vending that invention for the space of 14 years by the law of this country, as a reward for his ingenuity, and it is probable that this is as equal an one as could be fallen upon... In the same manner the author of a new book has an exclusive privilege of publishing and selling his book for 14 years. (Smith, 1982c, p.83) Adam Smith argued that while exclusive privileges and monopolies were generally detrimental, these could be defended: These two privileges can do no harm and may do some good...if the invention be good and such as is profitable to mankind, the inventor will probably make a fortune by it; but if it be of no value he will also reap no benefit. Similarly with new books, the exclusive privilege could be regarded as an encouragement to the labors of learned men....if the book be a valuable one the demand for it in that time will probably be a considerable addition to his (authors) fortune. But if it is of no value the advantage he can reap from it will be very small (Smith,op.cit.) and (Smith,

1982a, p.754). In correspondence with his publisher Thomas Cadell, Adam Smith mentioned about possibility of extending the copyright for his book The Theory of Moral Sentiments even beyond 28 years which was a maximum period granted (Smith, 1987, p.293). Currently, the patents and copyrights have different validity times but general legal principle is the same. In this sense we can derive at least some legal attributes of technology from the legal considerations of Adam Smith. Utility Value of any result of human activity, including products and other technical objects, is related to its utility. Adam Smith introduced concept of utility in the contexts of purpose, satisfaction and approbation. He applied it to technical objects as follows: The fitness of any system or machine to produce the end for which it was intended, bestows a certain propriety and beauty upon the whole (Smith, 1982d, p.179). In more general terms, he referred to David Hume, as an ingenious philosopher from whom he adopted the explanation that the utility of any object pleases the master by perpetually suggesting to him the pleasure or conveniency which it is fitted to promote. Smith has showed the economic interpretation of utility in several examples, which are related to technology, quality, value and price. One of them illustrates this concept: A watch... that falls behind above two minutes in a day, is despised by one curious in watches. He sells it perhaps for a couple of guineas, and purchases another at fifty, which will not lose above a minute in a fortnight. (Smith, 1982d, p. 180). Economic impact and economic attributes of technology may be derived from this general concept of utility.

A model of technology
As suggested in the preceding section, it is possible to derive six categories of attributes of technology from the concepts used by Adam Smith. These are: commercial/market attributes, social attributes, engineering/industrial attributes, cognitive/scientific attributes, ethical/legal attributes, and economic attributes. They constitute a framework for hexagonal model of technology shown in Fig. 1. Commercial/market attributes of technology may allow for analysis and evaluation of a technology in terms of its expected or real impact on competitive advantage, and on potential for creating a temporary monopoly due to novelty of products, processes or systems. This link to competitive advantage of a firm may be used for establishing a technology strategy and rules for marketing of technology-based products or services. Social attributes may serve as basis for analysis of such impacts of a technology as shifts in labor force structure, needs for professional retraining or

consequences leading to unemployment. At the same time they may allow to characterize internal structure of an organization that takes advantage of new technology. Engineering/industrial attributes may include such elements as technical specifications and requirements, operational configuration of a technological process, managing technical projects etc. Cognitive/scientific attributes of a technology indicate to what extent it is based on scientific theories, where its limitations are and what are the potential new phenomena that may be examined due to implementation of that technology (e.g. by use of new instrumentation, computation etc). Ethical/legal attributes of a technology allow determining to what extent it is or should be subject to intellectual property protection in the form of patents or copyright. Other legal properties and legal consequences of technology may be listed and analyzed to set certain rules or limitations of technology applications due to potential negative side effects on natural environment, health, safety etc. Economic attributes of a technology may serve for defining productivity as well as cost, price and value of products, processes and systems. These attributes play practical role in analysis and evaluation of projects and in investment decisions related to acquisition or transfer of technology.

Conclusions
The study of Adam Smiths works, published originally in the XVIII century, provides an interesting perspective on technology and its attributes. Even though the term of technology has never been used by Smith, his fundamental theory of economics in combination with concepts he used in contributions to such disciplines as philosophy, law, ethics and rhetoric may together constitute a framework for contemporary analysis of technology. In particular, the six concepts, which have been identified in this paper, serve as basis for a hexagonal model of technology, in which corresponding six categories of attributes of technology are presented. These categories appear to be mutually consistent and they may be used to reflect properties of technology as an object of analysis and management. The proposed model might be considered as potential framework for curriculum design in programs of technology management. Due to extremely strong impact of technological change on virtually all fields of human activity and due to its growing social costs and evolving expectations, further research is needed to develop a methodology for implementation of the proposed model in education and practice of technology management.

UTILITY

BARTER/ EXCHANGE

ECONOMIC ATTRIBUTES

PATENTS/ COPYRIGHT

COMMERCIAL/ MARKET ATTRIBUTES

ETHICAL/ LEGAL ATTRIBUTES

TECHNOLOGY

SOCIAL ATTRIBUTES

COGNITIVE/ SCIENTIFIC ATTRIBUTES

DIVISION OF LABOR

ENGINEERING /INDUSTRIAL ATTRIBUTES

INVENTIONS

ARTS AND MANUFACTURE

Fig. 1. Hexagonal model of technology and its attributes. Six technology related concepts used by Adam Smith are presented in frames.

References
Buchholz, T. G. (1989). New Ideas From Dead Economists. Penguin Books,N. Y. Cobb, C. W. and P. H. Douglas (1928). A theory of production. American Economic Review, Supplement. March. Cohen, R. S. (1983). Social implications of recent technological innovations. In: Philosophy and Technology (P. T. Durbin, F. Rapp, eds.) pp. 35-47. D. Reidel Publishing Company, Dordrecht, Holland. DeGregori, T. R. (1985). A Theory of Technology. Iowa State University Press, Ames, Iowa. Dosi, G. (1982). Technological paradigms and technological trajectories. Research Policy, 11, 147-162. Durbin, P. T. and F. Rapp (eds), (1983). Philosophy and Technology. D. Reidel Publishing Company, Dordrecht, Holland. Ferre, F. (1988). Philosophy of Technology. Prentice Hall, Englewood Cliffs, N.J. Girifalco, L. A. (1991). Dynamics of Technological Change. Van Nostrand Reinhold, New York. Gold, B. (1979). Productivity, Technology and Capital. Lexington Books, Lexington, Massachusetts. Kotarbinski, T. (1965a). Praxiology An Introduction to the Science of Efficient Action, Oxford and Warsaw. Kotarbinski, T. (1965b). Traktat o Dobrej Robocie (Treatise on Good Work), PWN, Warsaw. Pelc, K. (1987). Book Review: Thomas R. DeGregori, A theory of technology: Continuity and change in human development, Techn. Forecasting and Soc. Change, 32, 115-118. Pratten, C.F. (1980). The manufacture of pins, Journal of Economic Literature, March, pp. 93-96. Rapp, F. (1981). Analytical Philosophy of Technology. D. Reidel Publishing Company, Dordrecht, Holland. Smith, A. (1982a). An Inquiry Into the Nature and Causes of the Wealth of Nations. Edited by Campbell, R. H., Skinner, A. S. and W. B. Todd. Liberty Press/ Liberty Classics, Indianapolis. Smith, A. (1982b). Essays on Philosophical Subjects. Edited by Wightman, W. P. D. and J. C. Bryce. Liberty Press/ Liberty Classics, Indianapolis. Smith, A. (1982c). Lectures on Jurisprudence. Edited by Meek R. L., Raphael, D.D. and P. G. Stein. Liberty Press/ Liberty Classics, Indianapolis. Smith, A. (1982d). The Theory of Moral Sentiments. Edited by Raphael, D. D. and A. L. Macfie. Liberty Press / Liberty Classics, Indianapolis. Smith, A. (1985). Lectures on Rhetoric and Belles Lettres, Edited by Bryce, J. C. Liberty Press/ Liberty Classics. Indianapolis Smith, A. (1987). Correspondence of Adam Smith. Edited by Mossner, E. C. and I. S. Ross. Liberty Press/ Liberty Classics, Indianapolis. --- (1971) The Compact Edition of the Oxford English Dictionary, Oxford University Press, Oxford.

10