Wealth of Nations: Division of Labor

Even though it is not assigned in most undergraduate courses in Economics, all economists should read “The Wealth of Nations” by Adam Smith. This book is the formal foundation of Economics and every sentence is ingenious. You could spend hours thinking about one sentence in the Wealth of Nations and that is why instead of writing a book review on the whole book, which would do it no justice, I am going to discuss things I stumbled over or thought while reading it.

The first installation starts with division of labor. This is the single greatest invention man had ever invented. I believe it beats the wheel and fire by far. The division of labor allows someone who could maybe make one item of something a day, combine their labors with other to make many time what they could. The division of labor is what most people think of when they think of an assembly line. It also works in other ways as in a farmer can sell his corn to a distributor who then sells it to a grocery store. This is much cheaper and allows the farmer to produce more than for him to do all of those things on his own.

The interesting entrepreneurial aspect is that he believes that division of labor allows the worker to figure out how to innovate in their sector. This is because of the profit motive, which in this case is the worker trying to make as much money while doing the least possible. I know that I do this all the time when doing a boring job. It could be as simple as spacing papers that you are trying to stamp in a certain way so you do not have to keep flipping pages with every stamp. I am sure the possibilities get more complicated but I think you get the point.

There was one last interesting idea in the first section and it was when he was talking about how climate has to do with trade. I took that he also said that countries would be very tempted to nationalize these industries. This is true when it comes to places like Cuba and it has been one of the laws I adopted long before I knew that this was going to be in the book. From what I understand, he later deviates from the climate advantage and Ricardo focuses more on it.

Division of labor should not be something that is overlooked even as simple as it may seem. When people think of the human race and why it is so far advanced than dogs or any other animals, the answer lies within the division of labor. Mass production and the progression of society has all been contributed to division of labor. The reason why we today can worry about which iPod to buy and not whether we are going to catch the food we are going to eat tonight or starve is due to division of labor.

This is the first installment of many writing on the Wealth of Nations and Adam Smith. I will of course space these out and not overload my posts with just Smithian comments.

~PCCapitalist

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Published in: on December 29, 2008 at 3:52 pm  Comments (1)  
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  1. […] Wealth of Nations: Division of Labor « The Public Choice Capitalist reddit_url=’http://www.baby-parenting.com/birth/labor_and_delivery.html’ reddit_title=’Labor and Delivery – Getting ready for labor and signs of labor and its stages’ […]


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