Even a relatively simple business like a restaurant divides up the task of serving meals into a range of jobs like top chef, sous chefs, less-skilled kitchen help, servers to wait on the tables, a greeter at the door, janitors to clean up, and a business manager to handle paychecks and bills—not to mention the economic connections a restaurant has with suppliers of food, furniture, kitchen equipment, and the building where it is located.
A complex business, like a large manufacturing factory such as the shoe factory shown in Figure 3, or a hospital, can have hundreds of job classifications.
When the tasks involved with producing a good or service are divided and subdivided, workers and businesses can produce a greater quantity of output. In his observations of pin factories, Smith observed that one worker alone might make twenty pins in a day, but that a small business of ten workers some of whom would need to do two or three of the eighteen tasks involved with pin-making , could make 48, pins in a day. How can a group of workers, each specializing in certain tasks, produce so much more than the same number of workers who try to produce the entire good or service by themselves?
Smith offered three reasons. First, specialization in a particular small job allows workers to focus on the parts of the production process where they have an advantage. People have different skills, talents, and interests, so they will be better at some jobs than at others. The particular advantages may be based on educational choices, which are in turn shaped by interests and talents. Only those with medical degrees qualify to become doctors, for instance.
For some goods, specialization will be affected by geography—it is easier to be a wheat farmer in North Dakota than in Florida, but easier to run a tourist hotel in Florida than in North Dakota.
If you live in or near a big city, it is easier to attract enough customers to operate a successful dry cleaning business or movie theater than if you live in a sparsely populated rural area. Whatever the reason, if people specialize in the production of what they do best, they will be more productive than if they produce a combination of things, some of which they are good at and some of which they are not.
Second, workers who specialize in certain tasks often learn to produce more quickly and with higher quality. This pattern holds true for many workers, including assembly line laborers who build cars, stylists who cut hair, and doctors who perform heart surgery. In fact, specialized workers often know their jobs well enough to suggest innovative ways to do their work faster and better. A similar pattern often operates within businesses.
In her he felt again, more distinctly than before, another person—division, conflict. Dividing a job into many specialized parts, with a single worker or a few workers assigned to each part. Division of labor is important to mass production. New Word List Word List. Save This Word! We could talk until we're blue in the face about this quiz on words for the color "blue," but we think you should take the quiz and find out if you're a whiz at these colorful terms. Origin of division of labor First recorded in — The benefit to the individual is that first dozens, then hundreds, and ultimately millions, of other people stand ready to work for each of us, in ways that are constantly being expanded into new activities and new products.
Smith gives an example—the pin factory—that has become one of the central archetypes of economic theory. As Munger notes, Smith divides pin-making into 18 operations. But that number is arbitrary: labor is divided into the number of operations that fit the extent of the market. In a small market, perhaps three workers, each performing several different operations, could be employed.
In a city or small country, as Smith saw, 18 different workers might be employed. In an international market, the optimal number of workers or their equivalent in automated steps would be even larger. The interesting point is that there would be constant pressure on the factory to a expand the number of operations even more, and to automate them through the use of tools and other capital; and to b expand the size of the market served with consequently lower-cost pins so that the expanded output could be sold.
While the bases of trade and exchange can be differences in tastes or capacities, market institutions would develop even if such differences were negligible. The Smithian conception of the basis for trade and the rewards from developing market institutions is more general and more fundamental than the simple version implied by deterministic comparative advantage.
Division of labor is a hopeful doctrine. Nearly any nation, regardless of its endowment of natural resources, can prosper simply by developing a specialization. That specialization might be determined by comparative advantage, lying in climate or other factors, of course. But division of labor alone is sufficient to create trading opportunities and the beginnings of prosperity. By contrast, nations that refuse the opportunity to specialize, clinging to mercantilist notions of independence and economic self-sufficiency, doom themselves and their populations to needless poverty.
Division of Labor By Michael Munger. Categories: Basic Concepts. As Plato put it: A State [arises] out of the needs of mankind; no one is self-sufficing, but all of us have many wants… Then, as we have many wants, and many persons are needed to supply them, one takes a helper… and another… [W]hen these partners and helpers are gathered together in one habitation the body of inhabitants is termed a State… And they exchange with one another, and one gives, and another receives, under the idea that the exchange will be for their good.
As Smith put it: [T]he very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause , as the effect of the division of labour.
Kennedy, Gavin. Khaldun, Ibn. Morales Meoqui, Jorge , Munger, Michael. Plato, n.
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