ABSTRACT
This chapter discusses Smith’s view of the labour market, with an emphasis on the normative aspects of labour income. The chapter considers John Rawls’s dismissive view of Smith, which tends to reinforce a traditional view of Smith as not having cared much about distributive justice, distributive equity being outside the scope of his concept of justice. Building on previous work, this view of Smith is shown to be erroneous, and that Smith did have a more extensive and more practical approach to the problem of distributive equity than is found in Rawls’s work. The chapter considers the microeconomics and the macroeconomics of labour income, taking up the consequentialist theme of Chapter 3 that Smith’s welfare criterion aimed at raising the well-being (broadly defined to include character and life expectancy) of the working class majority of the population. Smith’s approach to distributive equity is seen to be more concrete and measurable than Rawls’s inherently vague Difference Principle.
