Economics Dictionary of ArgumentsHome
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| Division of labor: Division of labor is the process of dividing work into smaller tasks and assigning those tasks to different people or groups. It is a way to organize work so that it is more efficient and productive. See also Labour, Work, Economy, Economics._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Adam Smith on Division of Labour - Dictionary of Arguments
Otteson I 29 Division of labour/Adam Smith/Otteson: After surveying the evidence that he could gather, Smith came to the conclusion that the primary factor in explaining Why some Places were increasing in wealth was the division of labor. What about natural resources? What about infrastructure? What about education? What about technology? Smith had considered these possibilities, but he discovered that they did not account for the differentials in wealth he was observing. >Geographical factors/Adam Smith, >Wealth/Adam Smith. Otteson I 30 Smith claims that dividing the labor required to complete a task enables a far greater production. Consider Smith's now-famous example of making Pins. Smith says that a pin-maker could, if he is a master at it, make no more than twenty complete pins in a day. A shop of ten such pin-makers could thus make 200 pins per day, if they each made one pin at a time from start to finish. If the various tasks involved in making pins are divided, however, with different people specializing on individual tasks "One man draws out the wire, another straightens it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head" (WN(1): 15), and so on - the overall production of pins increases dramatically. Smith argues that division oflabor will lead to specialization. Specialization, in turn, leads to increasing quantity of production because of three factors: first, "the increase of dexterity in every particular workman"; second, "the saving of the time which is commonly lost in passing from one species of work to another"; and, third, "the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many" (WN(1): 17). These three factors, and in particular the last one - innovation - lead, Smith claims, to a "great increase of the quantity" in production. In fact, Smith claims that that same ten-person pin-making shop could, if it divides the labor and allows specialization, make upwards of 48,000 pins per day, or the equivalent of 4,800 pins per person. That is an increase in production of 23,900%! Otteson I 31 Otteson: Here are the steps in Smith's Story of wealth: Step One: The labor is divided. Step Two: Production increases. Step Three: Increasing production leads to decreasing prices. Step Four: Decreasing prices leads to increasing standards of living. Adam Smith: „It is the great multiplication of the productions of all the different arts, in consequence of the division oflabour, which occasions, in a well-governed society, that universal opulence which extends itself to the Iowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society.“ (WN(1): 22) >Specialization. Otteson: (1) First, it highlights the extensive cooperation and interdependence that arises in markets: we all become dependent on one another to supply what we have "occasion for." For Smith, this is a cause of celebration. Far better to view others - including people from other countries, who speak different languages, who practice different religions, who are of different races, and so on -as opportunities for mutual benefit rather than as enemies to be feared. >Cultural differences. (2) Second, Smith speaks of "universal opulence," "general plenty," and of the common "workman." All of these emphasize Smith's primary concern, namely, the least among us. He is interested to understand how the poor can raise their estate. (3) Third and finally, note Smith's qualifier "in a well-governed society." What constitutes a "well-governed society"? >Society, >Government/Adam Smith, >Government Policy. 1. Smith, Adam. (1776) The Wealth of Nations. London: W. Strahan and T. Cadell._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconSmith I Adam Smith The Theory of Moral Sentiments London 2010 EconSmithV I Vernon L. Smith Rationality in Economics: Constructivist and Ecological Forms Cambridge 2009 Otteson I James R. Otteson The Essential Adam Smith Vancouver: Fraser Institute. 2018 |
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> Counter arguments against Smith
> Counter arguments in relation to Division of Labour
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