Smith begins his Inquiry into the Nature and Causes of the Wealth of Nations with the following assertion: “The greatest increase in the productive power of labor, and the greater part of skill, dexterity, and judgment when it is directed or applied, appears to be the effect of the division of labor” (Ii1).
When I ask students to read the sentence, they always get a blank star when they return the question. Why is role sharing important?
Sometimes one or two brave students come forward with the economist’s answer: productivity and efficiency.
Indeed, this is part of his answer. Smith explains:
So these 10 people were able to make over 48,000 pins in a day. Therefore, each person making one-tenth of 48,000 pins might be thought of as making 4,800 pins in a day. But if they all worked separately and independently, and no one was educated in this specialized work, they definitely would not have been able to make 20 pins in a day, maybe even one. That’s certainly not 1/240th, and perhaps 1/4,800th, of what we can do today with a good division and combination of different operations (Ii3).
Division of labor increases production by dividing the separate tasks of making an object among different people, increasing efficiency and thereby simplifying the work each person has to perform. On the economic side, this innovation, which Smith recognized, was the catalyst for the Industrial Revolution and a precursor to comparative advantage, David Ricardo’s economic concept of advantage in production between industries and nations. But for Smith, and for us, the answer is much more than that.
As members of Generation Z, the generation of side-hustlers and multitaskers, my students should understand the division of labor better than most, but when I think about most of them, the beauty of the division of labor is that they don’t have to create or pay for anything they use in their daily lives from start to finish themselves.
In the 21st century, have we reached a point where the division of labor is no longer surprising?
Perhaps because I am trained to think about political and economic breakthroughs, I often think about the benefits of the division of labor. For example, I’m always looking for a way out of household chores. When I was younger, this took the form of figuring out if there were shortcuts I could use that my mom wouldn’t notice. Now that you’re an adult and have a job, you’re looking for some kind of device to make the mundane tasks of daily life easier. The best invention in this regard is iRobot’s Roomba. Instead of me spending time vacuuming my dog Lacey or cleaning up her mess every day, the machine does it for me. This leaves you free to read more, write more, or even watch Netflix. For my students, the division of labor allows them to spend time on projects they are passionate about and even create something from scratch if they wish. Before the 18th century, doing it yourself from start to finish wasn’t an option, nor would it have been a source of YouTube fame. Making everything yourself from start to finish has always been a reality of everyday life for most people in most places. However, division of labor allows for more freedom. Smith tells the story of a boy who, thanks to the division of labor, becomes interested in doing small jobs in a factory. Division of labor promotes efficiency because each person can work on and master one small task without having to constantly switch between tasks. But it also encourages each worker to do his or her particular job faster and easier.
In the first fire engines, a boy was always employed to alternately open and close the communication between the boiler and the cylinder as the piston rose or fell. One of those boys, who liked to play with his friends, noticed that if he tied a string from the handle of the valve that opened this communication to another part of the machine, the valve would open and close without his help, and he was free to have fun with his playmates. One of the greatest improvements made to this machine since it was first invented was the discovery of a boy who wished to save his labor in this way. (Ⅱ8)
In order to play freely with his friends, the boy invents a better way to move a fire truck. He benefits because he gets extra playing time. Bosses benefit by freeing up employees for other manual tasks. Consumers also benefit by reducing the amount of labor required and lowering the final cost of the product.
But the division of labor is also more than the sum of its parts: the division of labor tasks. Roomba and I, the students, and the factory boy all benefit from the increased freedom that comes with the division of labor. Smith particularly emphasizes these moral benefits of the division of labor. Another moral advantage of the division of labor is that it increases the need for exchange.
We expect dinner not out of the benevolence of the butcher, brewer, or baker, but out of consideration for their own interests. We speak to ourselves towards their self-love rather than their humanity, and we never talk to them about their benefits rather than their needs. (I.ii.2)
Smith makes this statement after asserting the fundamental features of human nature that make division of labor possible: the human desire to truck, barter, and exchange. Dogs have no concept of trading bones, whereas humans are always thinking of ways to work with others to improve the situation.
This statement about human nature is the second statement made by Smith in his work. The first is in the first line of his first book, The Theory of Moral Sentiments.
However selfish a man may seem, there are clearly principles in his nature that make him interested in the fate of others, and make their happiness necessary to himself, yet he derives nothing from it except the pleasure of seeing it. (II1.1)
For Smith, human nature is characterized by two main qualities. It is the tendency to put yourself in another person’s shoes, a process he calls compassion. The other is the urge to improve one’s condition by interacting with others. The two go hand in hand. We quickly learn that we cannot interact with others without putting ourselves in their shoes. why? Because you don’t know what to offer to get what you want from them. Having money makes this somewhat easier, but an example I always use in class is kids swapping leftover lunches in middle school. If you really want another child’s pudding cup, you should know their preferences so you can have them exchange it with you. If you offer leftover Brussels sprouts, you probably won’t have any luck, but offering their favorite fruit or another dessert might work. For Smith, the division of labor built on two natural tendencies in human nature, and in doing so created the possibility of increased efficiency, cheaper production, and more employment. He also emphasized the division of labor to promote human cooperation and understanding on a large scale. In fact, one of the reasons why the division of labor is the “greatest improvement” is because it was not someone’s special design or the invention of one brain. The division of roles depends on each individual’s self-love and striving to improve his or her condition, and in doing so encourages human beings to take an interest in each other.
It also guarantees jobs, social mobility, and invention for the least well-off in society. Smith says, “But they were so poor that, although they were indifferent to the necessary machinery, with hard work they could make about 12 pounds of pins in a day.” He also states that they can do this “without being educated in this particular business” (Ii3). The division of labor allows people who are not wealthy or have not had the benefit of education to contribute productively to society and live a prosperous life.
Many who seek to denounce the promise of commerce cite Smith, who sounds like an early Marx, introducing the concept in volume 5 of The Wealth of Nations, saying that division of labor can make humans “as stupid and ignorant as human creatures can be,” but Smith actually associates division of labor with innovation and freedom for those at the bottom of society. Remember the boy who innovated for the “freedom” to play with his friends (Vif50)? Therefore, the division of labor is a double-edged sword. Is it really the biggest improvement in labor?
So, when students ask me, why do we make such a fuss about the division of labor? First of all, everything you own, everything you can do on a daily basis, everything you enjoy, and the ease with which you enjoy it, is because of the division of labor. Division of labor also opens up jobs to more individuals and helps create the hockey-stick effect of growth that the world has enjoyed since the Industrial Revolution. But more than that, Smith rated it the “greatest improvement” because it offered the potential for greater human cooperation, mutual understanding, and freedom.
Editor’s Note: To celebrate the 250th anniversary of the publication of Inquiry into the Nature and Causes of the Wealth of Nations, we are featuring some of the biggest hits from AdamSmithWorks, part of the Freedom Fund network. This piece was originally posted there.
