From Field to Town and Country

stadial theory economic development

Marko Veckov for AdamSmithWorks

Smith’s stadial theory has raised many questions and met with many scholarly challenges. Veckov draws attention to what we can learn from it today. 
According to Adam Smith, every society passes through four phases of development: hunters, shepherds, agriculture, and commerce. Long ago societies of hunter-gatherers were nomadic, meaning they weren’t attached to a single piece of land. In those early stages, division of labor led some individuals to specialize in hunting, others in fishing, some in clothes-making, and others gathered plants and vegetables. Once more permanent human settlements were established, cultivation of plants and vegetables and appropriation of land occurred. Human societies become less nomadic and more focused on livestock, and even more tied to their place of residence, where they grow and harvest crops. The most advanced societies in his time were already in this third phase. 

The accumulation of land also happened due to the division of labor, which created surpluses, which any member of the tribe of hunter-gatherers could exchange for the surplus of other members. Just as this possibility led to the accumulation of other stocks, like clothing and food, it led to acquiring of land. The natural course of things, Adam Smith observes, is that the creation of the first towns was preceded by the cultivation of this land in the inland country. The surplus of cultivators of land enabled them to send some of their surplus to inhabitants of the town, which in exchange sent some of its manufactured goods to the inland inhabitants, or country. Towns and villages were created when occupiers of such professions as smiths, bricklayers, and stonemasons settled at a certain distance from the cultivators of land or farmers. This became possible as they weren’t tied to a particular piece of land, as farmers were. 

Sometimes, occupiers of these professions would acquire a little piece of land for themselves and become farmers, as was the case in North America in Adam Smith’s time. The natural course of things, the author of Wealth of Nations observes, encouraged trade between the town and country, but also between these settlements and more distant places. As trade to these distant places was less secure, the capital of these tradesmen was also less secure. At the same time, the capital of the manufacturers who would supply them with finished goods was more secure in comparison to that of the traders, but less so in comparison to the inland farmers. The farmer would have had a higher degree of command over his capital than the manufacturer. Often this need for security would come to be outsourced to the state. This foreign trade naturally developed over the course of time, and sometimes long after domestic towns and villages were established.

 While Smith’s stadial theory has raised many questions and met with many scholarly challenges, the progression of cooperative trade from between family members, to between community members, to between members of other communities it remains a good example of the natural benefits we find today in international trade, and that the division of labor will continue to expand to the limits of the market. 

Want to explore more?
John Burrow, Adam Smith and Stadial Theory, at Speaking of Smith

Maria Pia Paganelli, Adam Smith and Economic Development in Theory and Practice: A Rejection of the Stadial Model? In the Journal of the History of Economic Thought

Michael Munger, Division of Labor, Part 3: The System of Exchange, at AdamSmithWorks

Dig deeper into Smith’s text “Of the Natural Progress of Opulence” with our Reading Guide