--- MAPPING: wages-of-labour-to-system-1-operations ---

# wages of labour -> System 1 - Operations

## Economic Entity Reference

--- ENTITY: wages of labour ---

# Wages of Labour

## Definition

The natural recompense or compensation that a labourer receives for their work, which in the original state of things constituted the whole produce of their labour before the appropriation of land and accumulation of stock created deductions for rent and profit.

## Source Chapter

Book I, Chapter 8

## Context

The central concept explored throughout the chapter, examining how wages are determined by the contract between masters and workmen, how they vary across different circumstances, and their relationship to national wealth and population growth.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 1 - Operations

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops, individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Wages of labour represent the direct compensation for operational work performed by System 1 entities (labourers, journeymen, servants). These workers constitute the primary productive units that create value through their labour, which is the fundamental operational activity in Smith's economic system. The wages they receive are the immediate output of their operational contribution, making this entity a core component of System 1's value-producing activities.

## Mapping Strength

Strong

---

--- MAPPING: landlord-to-system-5-policy ---

# landlord -> System 5 - Policy

## Economic Entity Reference

--- ENTITY: landlord ---

# Landlord

## Definition

The owner of land who, once land becomes private property, demands a share of almost all the produce which the labourer can either raise or collect from it, making rent the first deduction from the produce of labour employed upon land.

## Source Chapter

Book I, Chapter 8

## Context

Introduced as one of the three parties in the economic relationship, alongside the labourer and master, who claims a portion of the produce through rent once land becomes private property.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 5 - Policy

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing economic policy, national economic identity, the philosophical foundations of economic systems (mercantilism vs. free trade), the overarching purpose of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

Landlords represent the ultimate authority over land resources, which in Smith's framework constitutes the foundational property rights that define economic structure. Their claim to rent establishes the fundamental distribution rules that shape the entire economic system, similar to how System 5 establishes the identity and policy framework that governs the organisation. The landlord's role in defining what portion of produce is allocated to rent versus wages parallels System 5's function of establishing distribution principles.

## Mapping Strength

Moderate

---

--- MAPPING: master-manufacturer-to-system-3-control ---

# master manufacturer -> System 3 - Control

## Economic Entity Reference

--- ENTITY: master manufacturer ---

# Master Manufacturer

## Definition

The employer who advances materials, wages, and maintenance to workmen in manufacturing, sharing in the produce of their labour or in the value which their labour adds to the materials, with this profit making a second deduction from the produce of labour.

## Source Chapter

Book I, Chapter 8

## Context

Presented as the second major economic actor alongside landlords, who advances capital to workers and claims profit as their share of the produce of labour.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 3 - Control

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**In economic terms:** Government regulation of trade, taxation policy, labour laws, enforcement of contracts, the "invisible hand" as emergent internal regulation, guilds and corporations governing members.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Master manufacturers exercise direct control over production processes by providing capital, materials, and wage payments to workers, while claiming profit as their share. This mirrors System 3's function of managing internal operations, allocating resources, and establishing the rules under which System 1 (labourers) operate. The master's role in coordinating production, setting work terms, and extracting profit from labour operations directly parallels System 3's internal management and control functions.

## Mapping Strength

Strong

---

--- MAPPING: combination-of-workmen-to-system-2-coordination ---

# combination of workmen -> System 2 - Coordination

## Economic Entity Reference

--- ENTITY: combination of workmen ---

# Combination of Workmen

## Definition

The collective action by labourers to raise their wages through coordinated efforts, which Smith observes are frequently heard of and often involve violence, clamour, and outrage, though generally ending in punishment or ruin of the ringleaders.

## Source Chapter

Book I, Chapter 8

## Context

Discussed as one side of the wage negotiation dynamic, contrasting with the more successful combinations of masters, and illustrating the power imbalance between workers and employers.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 2 - Coordination

The information channels and bodies that allow the primary activities in System 1 to communicate with each other and that allow System 3 to monitor and coordinate activities. System 2 dampens oscillations and resolves conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict resolution, standardisation.

---

## Mapping Rationale

Combinations of workmen represent collective coordination mechanisms among operational units (labourers) to negotiate wage terms with masters. This coordinated action serves to align the interests of multiple System 1 entities and resolve the inherent conflict between workers and employers over wage distribution. While Smith notes these combinations are often unsuccessful, they function as attempts at coordination and conflict resolution between operational units, which is the primary role of System 2.

## Mapping Strength

Moderate

---

--- MAPPING: combination-of-masters-to-system-3-control ---

# combination of masters -> System 3 - Control

## Economic Entity Reference

--- ENTITY: combination of masters ---

# Combination of Masters

## Definition

The tacit and constant agreement among employers not to raise wages above their actual rate, which Smith argues is the natural state of things and is everywhere a most unpopular action to violate, often conducted with silence and secrecy when attempting to lower wages below this rate.

## Source Chapter

Book I, Chapter 8

## Context

Presented as the more effective side of wage negotiations, able to hold out longer than workmen due to greater financial resources and legal authorization for their combinations.

## Economic Domain

Regulation

---

## VSM Concept Reference

### System 3 - Control

The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**In economic terms:** Government regulation of trade, taxation policy, labour laws, enforcement of contracts, the "invisible hand" as emergent internal regulation, guilds and corporations governing members.

**Key properties:** Internal regulation, resource allocation, accountability, synergy extraction, performance management.

---

## Mapping Rationale

Combinations of masters exercise internal control over wage levels by establishing tacit agreements that regulate the compensation of System 1 workers. This coordinated control mechanism among employers establishes the rules and constraints under which labour operations function, directly managing the internal environment of wage determination. The masters' ability to maintain wage levels through collective action mirrors System 3's function of establishing operational rules and managing internal economic relationships.

## Mapping Strength

Strong

---

--- MAPPING: funds-for-maintaining-labour-to-system-4-intelligence ---

# funds for maintaining labour -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: funds for maintaining labour ---

# Funds for Maintaining Labour

## Definition

The financial resources destined for the payment of wages, consisting of two kinds: first, the revenue which is over and above what is necessary for the maintenance of those who possess it, and secondly, the stock which is over and above what is necessary for the employment of their masters.

## Source Chapter

Book I, Chapter 8

## Context

Identified as the determining factor for the demand for labour, with increases in these funds leading to increases in the number of labourers employed and consequently higher wages.

## Economic Domain

Accumulation

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

Funds for maintaining labour represent the economic intelligence about resource availability that determines future employment capacity and wage levels. These funds scan the economic environment to identify available capital and revenue that can be deployed for future labour investment. Their growth or decline provides strategic information about the economy's capacity to support workers, functioning as intelligence about the economic environment that guides future adaptation and resource allocation decisions.

## Mapping Strength

Moderate

---

--- MAPPING: menial-servants-to-system-1-operations ---

# menial servants -> System 1 - Operations

## Economic Entity Reference

--- ENTITY: menial servants ---

# Menial Servants

## Definition

Domestic workers employed by landlords, annuitants, or monied men who have revenue beyond what they judge sufficient to maintain their own family, with increases in their surplus revenue naturally leading to increases in the number of such servants.

## Source Chapter

Book I, Chapter 8

## Context

Used as an example of how increased revenue for those who live by income rather than labour creates additional demand for wage-labourers.

## Economic Domain

Consumption

---

## VSM Concept Reference

### System 1 - Operations

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops, individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Menial servants constitute operational units that directly produce domestic services, representing a form of productive activity within households. Though their work is domestic rather than commercial, they function as System 1 entities by performing specialised tasks that create value for their employers. Their wages represent the compensation for operational work, and their employment responds to the availability of surplus revenue, making them integral operational components of the economic system.

## Mapping Strength

Strong

---

--- MAPPING: journeymen-to-system-1-operations ---

# journeymen -> System 1 - Operations

## Economic Entity Reference

--- ENTITY: journeymen ---

# Journeymen

## Definition

Independent workmen employed by master craftsmen who have surplus stock beyond what is necessary to purchase materials and maintain themselves, with increases in this surplus naturally leading to increases in the number of journeymen employed for profit.

## Source Chapter

Book I, Chapter 8

## Context

Presented as the second category of wage-labourers, distinct from menial servants, employed by independent craftsmen to work with surplus stock for profit.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 - Operations

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops, individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Journeymen are direct operational workers who perform productive labour in manufacturing and craft production. They represent the core System 1 entities that create value through their specialised skills and labour, working with materials provided by masters to produce finished goods. Their wages constitute the compensation for operational work, and their employment directly responds to the availability of surplus capital for production, making them fundamental operational components of the economic system.

## Mapping Strength

Strong

---

--- MAPPING: lowest-rate-of-wages-to-system-2-coordination ---

# lowest rate of wages -> System 2 - Coordination

## Economic Entity Reference

--- ENTITY: lowest rate of wages ---

# Lowest Rate of Wages

## Definition

The minimum wage below which it seems impossible to reduce the ordinary wages of labour for any considerable time, which must at least be sufficient to maintain the labourer and enable them to bring up a family, otherwise the race of such workmen could not last beyond the first generation.

## Source Chapter

Book I, Chapter 8

## Context

Identified as the natural floor for wages determined by the necessity of maintaining workers and their families, below which labour supply would eventually diminish.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 2 - Coordination

The information channels and bodies that allow the primary activities in System 1 to communicate with each other and that allow System 3 to monitor and coordinate activities. System 2 dampens oscillations and resolves conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict resolution, standardisation.

---

## Mapping Rationale

The lowest rate of wages functions as a coordination mechanism that stabilises the labour market by establishing a natural floor below which wages cannot sustainably fall. This minimum wage level coordinates the relationship between labour supply and demand by ensuring that workers can maintain themselves and reproduce, preventing the system from collapsing into unsustainable conditions. It serves as an anti-oscillatory mechanism that dampens extreme wage fluctuations and maintains systemic stability.

## Mapping Strength

Moderate

---

--- MAPPING: stationary-country-to-system-5-policy ---

# stationary country -> System 5 - Policy

## Economic Entity Reference

--- ENTITY: stationary country ---

# Stationary Country

## Definition

A nation whose wealth has remained long unchanged in extent, where the funds for maintaining labour have continued for several centuries at the same or nearly the same level, resulting in stable population and wages at the lowest rate consistent with common humanity.

## Source Chapter

Book I, Chapter 8

## Context

Used as a contrast to thriving nations, with China presented as an example where long-term economic stability has resulted in low wages and difficult conditions for labourers.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 5 - Policy

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing economic policy, national economic identity, the philosophical foundations of economic systems (mercantilism vs. free trade), the overarching purpose of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

A stationary country represents the policy identity and economic ethos of a nation that has chosen or been constrained into a stable equilibrium state. This condition reflects the fundamental policy choices or institutional constraints that define the nation's economic identity and purpose, similar to how System 5 establishes the overarching identity and policy framework for an organisation. The stationary state embodies the nation's economic values and the policy closure that maintains its current configuration.

## Mapping Strength

Moderate

---

--- MAPPING: thriving-country-to-system-4-intelligence ---

# thriving country -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: thriving country ---

# Thriving Country

## Definition

A nation experiencing continual increase in wealth, where the continual increase in the number of inhabitants and the funds for maintaining labour create competition among masters for workers, naturally raising wages above the lowest rate.

## Source Chapter

Book I, Chapter 8

## Context

Presented as the condition most favourable to high wages, with North America used as an example of rapid economic growth leading to high wages and favourable conditions for labour.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

A thriving country represents the intelligence function of an economy that successfully scans its environment and adapts to opportunities for growth. The continuous increase in wealth and population demonstrates effective environmental monitoring and strategic response to economic conditions. This dynamic state reflects System 4's role in gathering information about external opportunities and internal capacities, then adapting the economic system to maintain viability through growth and development.

## Mapping Strength

Moderate

---

--- MAPPING: labouring-poor-to-system-1-operations ---

# labouring poor -> System 1 - Operations

## Economic Entity Reference

--- ENTITY: labouring poor ---

# Labouring Poor

## Definition

The great body of people who live by wages, including labourers, journeymen, and servants of every kind, who make up the far greater part of every great political society and whose improved circumstances are regarded as an advantage rather than an inconvenience to society.

## Source Chapter

Book I, Chapter 8

## Context

The central focus of Smith's analysis of wages, representing the majority of society whose welfare is presented as essential to a flourishing and happy society.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 1 - Operations

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops, individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

The labouring poor constitute the primary operational workforce that directly produces the economic value of society through their labour. As the majority of the population engaged in wage-based work, they represent the fundamental System 1 entities that create the goods and services that constitute the economy's output. Their improved circumstances directly correlate with the overall health and viability of the economic system, making them the essential operational foundation.

## Mapping Strength

Strong

---

--- MAPPING: progressive-state-of-society-to-system-5-policy ---

# progressive state of society -> System 5 - Policy

## Economic Entity Reference

--- ENTITY: progressive state of society ---

# Progressive State of Society

## Definition

The condition of a society that is advancing to the further acquisition of riches, rather than having acquired its full complement, which Smith argues is the happiest and most comfortable state for the labouring poor and all orders of society.

## Source Chapter

Book I, Chapter 8

## Context

Identified as the optimal condition for wages and general prosperity, contrasting with the dull stationary state and the miserable declining state.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 5 - Policy

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing economic policy, national economic identity, the philosophical foundations of economic systems (mercantilism vs. free trade), the overarching purpose of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

The progressive state of society represents the optimal policy identity and economic purpose that Smith advocates for national prosperity. This condition embodies the philosophical framework and policy objectives that define what constitutes a successful economic system, similar to how System 5 establishes the identity and purpose that guides organisational direction. The progressive state reflects the policy closure that balances various economic interests to achieve optimal outcomes for all members of society.

## Mapping Strength

Moderate

---

--- MAPPING: piece-work-wages-to-system-1-operations ---

# piece-work wages -> System 1 - Operations

## Economic Entity Reference

--- ENTITY: piece-work wages ---

# Piece-Work Wages

## Definition

A system of compensation where workmen are paid by the piece rather than by time, which Smith observes leads to greater activity and diligence among workers, though sometimes resulting in overwork and health damage when wages are high.

## Source Chapter

Book I, Chapter 8

## Context

Discussed as a wage system that encourages industriousness but requires moderation to prevent workers from ruining their health through excessive application.

## Economic Domain

Distribution

---

## VSM Concept Reference

### System 1 - Operations

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops, individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Piece-work wages represent a compensation mechanism that directly incentivises operational productivity by linking worker compensation to output volume. This system encourages System 1 entities (workers) to increase their operational efficiency and output, while also creating autonomy in how they achieve production targets. The piece-work system exemplifies the operational dynamics of System 1, where workers self-organise their effort within the constraints of the compensation structure to maximise their productivity.

## Mapping Strength

Strong

---

--- MAPPING: cheap-years-to-system-4-intelligence ---

# cheap years -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: cheap years ---

# Cheap Years

## Definition

Periods of agricultural abundance and low prices that tend to increase the proportion of independent workmen relative to journeymen and servants, while also encouraging masters to employ more labour due to increased funds for maintaining servants.

## Source Chapter

Book I, Chapter 8

## Context

Examined for their effects on wages and employment patterns, with Smith arguing they tend to increase independent work and moderate labour application.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

Cheap years represent environmental conditions that provide intelligence about economic opportunities and constraints. These periods of abundance signal favourable conditions for expanding employment and encouraging independent work, similar to how System 4 scans the environment for opportunities. The economic adaptations that occur during cheap years—increased independent work, moderated labour application—reflect strategic responses to environmental intelligence about resource availability and market conditions.

## Mapping Strength

Moderate

---

--- MAPPING: dear-years-to-system-4-intelligence ---

# dear years -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: dear years ---

# Dear Years

## Definition

Periods of scarcity and high prices that tend to diminish the proportion of independent workmen relative to journeymen and servants, while also reducing the funds for maintaining servants and increasing competition for employment.

## Source Chapter

Book I, Chapter 8

## Context

Examined for their effects on wages and employment patterns, with Smith arguing they tend to increase dependence and sometimes lead to lower wages.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

Dear years provide environmental intelligence about economic constraints and challenges that require strategic adaptation. These periods of scarcity signal the need for economic systems to adjust their employment patterns and wage structures, similar to how System 4 monitors environmental conditions that affect organisational viability. The economic responses to dear years—increased dependence, reduced independent work—reflect strategic adaptations based on intelligence about resource scarcity and market pressures.

## Mapping Strength

Moderate

---

--- MAPPING: subsistence-agriculture-to-system-1-operations ---

# subsistence agriculture -> System 1 - Operations

## Economic Entity Reference

--- ENTITY: subsistence agriculture ---

# Subsistence Agriculture

## Definition

The condition in China where labourers are content if they can earn enough through a day's labour to purchase a small quantity of rice in the evening, representing the lowest level of subsistence that still maintains population numbers.

## Source Chapter

Book I, Chapter 8

## Context

Used as an example of how low wages in a stationary economy can still maintain population through minimal subsistence levels.

## Economic Domain

Production

---

## VSM Concept Reference

### System 1 - Operations

The primary activities that produce the organisation's purpose. These are the operational units that directly create value. Each operational element is itself a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops, individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation, direct engagement with the environment.

---

## Mapping Rationale

Subsistence agriculture represents the most basic form of operational production where workers directly produce their own means of survival. This autonomous operational activity creates minimal value sufficient only for survival, yet it constitutes the fundamental System 1 function of producing value through direct engagement with the environment. The subsistence farmer operates as an autonomous unit within the constraints of minimal resource availability, creating the most basic economic output.

## Mapping Strength

Strong

---

--- MAPPING: public-registers-of-manufactures-to-system-2-coordination ---

# public registers of manufactures -> System 2 - Coordination

## Economic Entity Reference

--- ENTITY: public registers of manufactures ---

# Public Registers of Manufactures

## Definition

Official records that Smith argues often fail to capture the full extent of manufacturing activity, particularly the extraordinary work done in cheap years by independent workmen and family members working for their own consumption.

## Source Chapter

Book I, Chapter 8

## Context

Criticized as incomplete representations of economic activity that merchants and manufacturers often use to falsely announce prosperity or declension.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 2 - Coordination

The information channels and bodies that allow the primary activities in System 1 to communicate with each other and that allow System 3 to monitor and coordinate activities. System 2 dampens oscillations and resolves conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict resolution, standardisation.

---

## Mapping Rationale

Public registers of manufactures function as official coordination mechanisms that attempt to standardise and communicate information about manufacturing activity across the economic system. These records serve to coordinate understanding of economic conditions, even though Smith criticises their completeness. They represent an attempt at standardisation and information sharing that would allow different economic actors to coordinate their activities based on shared data about manufacturing output.

## Mapping Strength

Moderate

---

--- MAPPING: stock-of-the-country-to-system-4-intelligence ---

# stock of the country -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: stock of the country ---

# Stock of the Country

## Definition

The accumulated wealth of a nation that, when increasing, raises wages of labour by enabling masters to employ more workers and by increasing the demand for labour through both revenue and capital investment.

## Source Chapter

Book I, Chapter 8

## Context

Identified as the fundamental driver of wage increases, with its growth creating the funds necessary to maintain and employ more labour.

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

The stock of the country represents the accumulated economic intelligence about a nation's capacity for future growth and employment. This accumulated wealth provides strategic information about the economy's ability to maintain and expand its labour force, functioning as intelligence about internal resources that can be deployed for future development. The growth or decline of national stock provides crucial information for strategic economic planning and adaptation.

## Mapping Strength

Strong

---

--- MAPPING: demand-for-labour-to-system-2-coordination ---

# demand for labour -> System 2 - Coordination

## Economic Entity Reference

--- ENTITY: demand for labour ---

# Demand for Labour

## Definition

The need for workers in various employments that necessarily increases with the increase of the revenue and stock of every country, and cannot possibly increase without it, regulating the production of men like any other commodity.

## Source Chapter

Book I, Chapter 8

## Context

Presented as the key determinant of wages, with its fluctuations explaining variations in wage levels across different times and places.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 2 - Coordination

The information channels and bodies that allow the primary activities in System 1 to communicate with each other and that allow System 3 to monitor and coordinate activities. System 2 dampens oscillations and resolves conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict resolution, standardisation.

---

## Mapping Rationale

Demand for labour functions as a coordination mechanism that aligns the supply of workers with the needs of employers across the economy. This dynamic coordination resolves the fundamental conflict between labour supply and demand by establishing equilibrium wage levels that coordinate employment across different sectors. The demand for labour serves as an anti-oscillatory mechanism that stabilises the labour market by coordinating the activities of multiple System 1 entities (workers and employers).

## Mapping Strength

Strong

---

--- MAPPING: natural-complement-of-riches-to-system-5-policy ---

# natural complement of riches -> System 5 - Policy

## Economic Entity Reference

--- ENTITY: natural complement of riches ---

# Natural Complement of Riches

## Definition

The maximum level of wealth that the nature of a country's laws and institutions permits it to acquire, beyond which further accumulation becomes impossible, as Smith suggests has occurred in China.

## Source Chapter

Book I, Chapter 8

## Context

Used to explain why some wealthy nations like China can remain stationary with low wages despite their riches.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 5 - Policy

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing economic policy, national economic identity, the philosophical foundations of economic systems (mercantilism vs. free trade), the overarching purpose of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

The natural complement of riches represents the policy identity and institutional framework that defines the maximum economic potential of a nation. This concept embodies the constitutional and legal principles that establish the boundaries of economic growth, similar to how System 5 establishes the identity and policy framework that governs organisational limits. The natural complement reflects the policy closure that determines what level of wealth the economic system is permitted to achieve.

## Mapping Strength

Moderate

---

--- MAPPING: colony-prosperity-to-system-4-intelligence ---

# colony prosperity -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: colony prosperity ---

# Colony Prosperity

## Definition

The rapid economic growth and population increase in British North American colonies, where wages are high despite lower national wealth than England, due to the rapid increase in funds for maintaining labour.

## Source Chapter

Book I, Chapter 8

## Context

Presented as an example of how the rate of wealth increase, rather than absolute wealth, determines wage levels.

## Economic Domain

General Theory

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## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

Colony prosperity represents the intelligence function of identifying and capitalising on new economic opportunities in expanding territories. The rapid growth and high wages in colonies demonstrate successful environmental scanning and strategic adaptation to new conditions, similar to how System 4 monitors external opportunities for organisational development. This prosperity reflects the intelligence about frontier economic conditions that enables strategic responses to maximise growth potential.

## Mapping Strength

Moderate

---

--- MAPPING: economic-backwardness-to-system-5-policy ---

# economic backwardness -> System 5 - Policy

## Economic Entity Reference

--- ENTITY: economic backwardness ---

# Economic Backwardness

## Definition

The condition of nations like Bengal where funds for maintaining labour are decaying, leading to declining wages, increased poverty, and potential depopulation as labour supply exceeds demand.

## Source Chapter

Book I, Chapter 8

## Context

Used as an example of how declining economic conditions lead to falling wages and deteriorating living standards for the labouring poor.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 5 - Policy

The policy-making body that balances demands from Systems 3 and 4 and defines the identity, values, and purpose of the organisation. System 5 provides closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing economic policy, national economic identity, the philosophical foundations of economic systems (mercantilism vs. free trade), the overarching purpose of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure, balancing internal and external perspectives.

---

## Mapping Rationale

Economic backwardness represents the failure of policy identity and institutional framework to maintain economic viability. This condition reflects the consequences of policy choices or institutional constraints that prevent economic adaptation and growth, similar to how System 5's policy framework can either enable or constrain organisational development. The backwardness embodies the policy closure that has resulted in economic stagnation and declining conditions for the labouring population.

## Mapping Strength

Moderate

---

--- MAPPING: economic-prosperity-symptoms-to-system-4-intelligence ---

# economic prosperity symptoms -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: economic prosperity symptoms ---

# Economic Prosperity Symptoms

## Definition

The observable indicators that a nation is economically thriving, including high wages of labour, increasing population, and the liberal reward of labour that encourages propagation and industry.

## Source Chapter

Book I, Chapter 8

## Context

Identified as the natural symptoms of increasing national wealth, contrasting with the symptoms of economic stagnation or decline.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

Economic prosperity symptoms function as intelligence indicators that signal the health and viability of the economic system. These observable metrics provide information about the success of current economic policies and conditions, similar to how System 4 monitors performance indicators to assess organisational health. The symptoms of prosperity serve as feedback mechanisms that inform strategic decisions about maintaining or expanding economic growth.

## Mapping Strength

Strong

---

--- MAPPING: economic-stagnation-symptoms-to-system-4-intelligence ---

# economic stagnation symptoms -> System 4 - Intelligence

## Economic Entity Reference

--- ENTITY: economic stagnation symptoms ---

# Economic Stagnation Symptoms

## Definition

The observable indicators that a nation's economy is at a standstill, including scanty maintenance of the labouring poor and their starving condition, which Smith presents as natural symptoms that things are going backwards.

## Source Chapter

Book I, Chapter 8

## Context

Identified as the opposite of prosperity symptoms, indicating economic decline and deteriorating conditions for the labouring classes.

## Economic Domain

General Theory

---

## VSM Concept Reference

### System 4 - Intelligence

The bodies and processes that look outward to the environment to monitor how the organisation needs to adapt to remain viable. System 4 captures all relevant information about the outside-and-then environment. It is responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities, market research, new technology adoption, colonial exploration and trade route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic planning, modelling, research and development.

---

## Mapping Rationale

Economic stagnation symptoms function as intelligence indicators that signal systemic failure and the need for strategic intervention. These negative metrics provide crucial information about economic decline, similar to how System 4 monitors warning signs that require organisational adaptation. The symptoms of stagnation serve as algedonic signals that alert the economic system to critical conditions requiring immediate attention and strategic response.

## Mapping Strength

Strong

---