In the face of a recession, it’s hard to ignore a report from the Council on Foreign Relations that explains how closing the gender pay gap could add $28 trillion to global GDP. Women make up half of the population but only contribute 37 percent to the world’s GDP. This contrast made me think about how we can close the gap, and how we appreciate the unpaid, invisible, but important work that is already being done by women around the world. Interestingly, this train of thought led me to Adam Smith and his concept of “economic man”.
Adam Smith’s book The Wealth of Nations says: “We look forward to our dinner not because of the quality of the butcher, the brewer, or the baker, but because of their selfishness.” We do not speak to their personality but to their selfishness, and we do not speak to them about our needs, but about their welfare. ” In the hundreds of years since Smith wrote his main point – that economic people should act on their own interests, and thereby increase the wealth of nations – it has become the basis of modern economic thought.
What Smith did not consider was the economic importance of women – it is not surprising that she was writing in 1776 Scotland when few women earned wages, ran businesses, or worked outside the home at all. But their work was very important in building the economy of their country. Smith realized that in North America, “a large family of children, instead of being prosperous, brings wealth and prosperity to the parents.” Large families, and “husband and wife work together,” were the main differences between countries in their ability to acquire wealth.
He recognized the importance of what we would call “human development” today, and the difficult role of women in building society but did not explore the subject further. The truth is that unpaid work is still a reality for women around the world, just as it was in 1776. Do we value it differently than we did before? Adam Smith?
In his cleverly titled book, Who Cooked Adam Smith’s Dinner?Katrine Marcel asks if a woman in the economy is very different from how the economy has already become “women’s work.”
Remember Smith’s example of the “good butcher” – isn’t it from the goodness of our mothers that most of us look forward to our food? One may argue that a mother’s selfishness is raising her children to be strong so that she takes care of them when they are old, but that would reduce the mother’s love and efforts on behalf of her children. If Adam Smith were alive and writing today, would he appreciate unpaid work such as cooking dinner or raising children and what effect would this have on the basis of economic reasoning?
Apart from the moral debate, Smith would note how unpaid work affects the calculation of GDP – a recent UN study found that unpaid care and domestic work (especially those performed by women) “are important to be 10 and 39 percent of the Gross. Domestic Product and can help more in the economy than in the manufacturing, trade or transport sector.”
There is an old saying: “A man works from sun to sun, but a woman’s work is impossible.” It’s not one of Smith’s, but it’s likely that he would have agreed with the idea. If they were to write today about the benefits and effects of the “economic woman” together with her economic husband, we would have economic benefits for the traditional work of women to take care of families and build public wealth.
Unfortunately, Smith is not here today to share his thoughts with us, but his last home, Panmure House in Edinburgh, has been restored as a place for economic research and debate in the spirit of Smith’s work. The Panmure House Prize funds research into long-term investment and its relationship to innovation in the spirit of Adam Smith – this year’s prize will be awarded on 19 July in Edinburgh. Therefore, perhaps the concept of “financial woman” will be further explored in the coming years.