Adam Smith’s Division of Labor Essay Example

Adam Smith’s Division of Labor Essay Smith was not the first to advance the theory that all wealth is derived from labor. A medieval church-man and a seventeenth-century philosopher had developed a labor theory of value. Smith, however, broke new ground in building a complete system of economic thought around the concept of productive labor. The opening lines of the Wealth of Nations illustrate the importance of his approach. He believes that the annual labor of every nation originally supplies it with all the necessaries and conveniences of life. 2 The earlier writers in analyzing the economic order had woefully underestimated the significance of the laboring man. They were too concerned with the activities of the manufacturer, the merchant, and the farmer to pay much attention to the simple artisan. In Smiths treatise the laboring poor occupy a position of primary importance.The labor expended upon the manufacture of a commodity establishes its value. The quantity and quality of the countrys total production is in lar ge measure determined by the ability and dexterity of the working population. All techniques and institutions which affect the skill of the laboring groups are therefore most important because they directly influence the wealth of a nation. (Fay, pp 75-81)Smiths emphasis upon the hitherto most neglected stratum of society was most radical, and it is not surprising that he ran into difficulties in developing his thesis. In the past, land had always been viewed as a productive force in the national economy; capital had likewise not been considered sterile. Smiths presentation of labors claim conflicted with the vested rights of land and capital. It soon became clear that some compromise would have to be established, because the intrenched position of the older claimants was very strong. Even as attorney for the plaintiff, Smith had great respect for the defendants. Their prestige rather overawed him. Although he at first contended that labor was the sole determinant of value, it was n ot long before he admitted that rent and profits might also influence value. This compromise contained many implicit contradictions, which Karl Marx almost a century later devoted some time to eradicate. He succeeded, but only to a limited extent, for though he strengthened the weak links in Smiths chain of reasoning, he added new ones which proved none too strong. (Brown, pp 123-131).Adam Smith, however, wrote a very interesting brief, despite its deficiencies in logic. The history of the world was in his opinion the history of the increasing efficiency of labor. The absence of specialization in antiquity accounts for the poverty of that period. The agriculturist could improve the yield of his crops only if he were able to make an intensive study of the land. He was, however, forced to spend a considerable part of his time in securing food, shelter, and clothing for himself and his family, and was therefore unable to devote his entire energies to the care of his plants. Some member s of the community showed great talents in the chase, while others proved to be expert house builders. After many centuries of development it became clear that the entire group would benefit if each member engaged in that activity for which he was best fitted. A hunter could kill within a very short time more deer than he could possibly use for his personal needs. A thatcher was able to put his own dwelling into condition by two weeks concentrated effort. A farmer, working on fertile land, could raise more than he could consume. The several specialists commenced to exchange their surplus commodities and labor power, and very soon the wealth of the community increased. An economic society could be most efficiently organized upon the basis of specialization and exchange.The first book of the Wealth of Nations is devoted almost entirely to an analysis of those forces which facilitated the division of labor among men. The treatment afforded the working population becomes highly signific ant in an approach which considers national progress to be largely determined by improvements in the specialization of labor. Merchants had maintained that English prosperity was due to their trading activities. The farming population had contended, although less frequently, that they formed the backbone of the national economy. Adam Smith, however, asserted that the welfare of all countries, at all periods in the worlds history, depended upon the status of labor and the development of the industrial arts. (Lloyd, pp 45-49)Adam Smith had not the least sympathy with the philosophers of this school. He deprecated the heavy taxation of necessities; future generations would suffer if the poor were unable to give their children a proper upbringing. If the laborers wages were lowered their offspring would probably suffer from malnutrition and exposure. Taxes which fall on a necessitous person are always cruel and oppressive; the worst taxes are those which bear more heavily on the poor th an on the rich. For instance the window levy was most unjust, for the poor could no longer afford to have either light or ventilation in their homes.The taxation of the poor cannot be supported even by mercantilistic arguments. A careful analysis proves that taxes upon labor or upon commodities used by labor are certain to be paid by their superiors. If the subsistence of wage earners were reduced their efficiency would be impaired and manufacturers would suffer. The latter, in order to protect themselves, would probably raise wages. In either case the middle and upper classes would be forced to bear the burden.The policy of England was to keep the laboring population servile and industrious. Merchants and manufacturers, fearful that they would have to foot the bill if the laborers improved their condition, attempted to stifle all social reform. No respectable member of English society would have advocated raising the standards of living of the laboring poor. Adam Smith, however, wa s Scottish and was therefore not oppressed by the taboos which prevailed south of the Midlands. He did not hesitate to emphasize the facts that rent and profits eat up wages, and that the two superior orders of people usually oppress the inferior one. Furthermore, he pointed out that unless circumstances force them, the wealthier classes never act generously or humanely in their dealings with their less fortunate brethren. Manufacturers loudly bemoan the high wages which they pay their workmen, but remain silent when profits are discussed. If the public complains about the dearness of commodities, the shrewd business men lose no time in placing the blame upon the high rewards of labor, forgetting to mention that their own rate of return might possibly influence prices. (Ross, pp 108-111).It was fantastic to fear high wages, for whatever improves the general welfare of the greater part of the community can never be considered an inconvenience to the whole. Poverty is a great social l iability. An able laboring population is possible only if workers receive ample remuneration for their efforts; hence to complain of the liberal rewards to labor is to lament the effect and the cause of the greatest public prosperity. As wealth increases, wages increase, and therefore population increases, all of which is for the good of the commonwealth.Thus to understand how the division of labor symbolizes a multiplication of the knowledge used in production, it is merely necessary to recognize that in a division-of-labor society, such as our own, there are as several distinct bodies of knowledge used in production as there are different specializations and subspecializations of employment. Steel producers, for instance, have a different body of knowledge from that of auto producers. Wheat farmers have a different body of knowledge from both of these and even from that of other farmers, for example vegetable growers or dairy farmers. The bodies of knowledge of all such specializa tions enter into the process of production in a division-of-labor society, and every individual is enabled to get products reflecting the total of such knowledge. Consequently, steel producers give the benefit of their knowledge to the whole rest of society; in return, they are capable to receive from the rest of society the benefit of the specialized knowledge held by all further categories of producers. Therefore it is with the members of every specialization. Â  (The Washington Times, pp 14-17)This is an outcome of huge importance, and its implication needs to be carefully measured. What a division-of-labor society symbolizes is the organization of thesame total sum of human brain power in a way that allows it to store and use greatly more knowledge than would otherwise be possible. To grab this point completely, we must consider the contrasting case of a non-division-of-labor society, for example exists in most of Asia, Africa, and Latin America. In those areas, where the overw helming majority of people live as almost self-sufficient farmers, each family knows fundamentally what all the others know about production. To verify this fact, one might imagine an effort to compile all the knowledge entering into production in such places. One might imagine a corps of interviewers who get a grant from the U.S. government to go out and write down all that the rural farm families of these areas know regarding production. After interviewing the first such family in each area, very little further information would be gained from interviewing the hundreds of millions of other such families. What this means, essentially is that the sum total of the knowledge used in production in a non-division-of-labor society is restricted to what the brain of just one or two individuals can hold. Any one farmer, or farmer plus his wife, in those areas holds virtually all of the knowledge that is used in production in the entire society. Â  (Bourne, pp 209-215)To put it gently, suc h circumstances is a case of wasteful duplication. It is the wasteful duplication of the mental contents of the human brainthe wasteful use of mans capability to store and use knowledge. In this respect and in this sense, a division-of-labor society is indispensable to the proficient use of the human mind in production. To the degree that production is divided into separate specializations, with separate bodies of knowledge, the same total of human brain power is enabled to store and use more knowledge, to the benefit of each and every individual member of that society. This is the meaning of the proposition that the division of labor symbolizes the multiplication of the knowledge used in production. It multiplies such knowledge to the extent that specializations and specialized bodies of knowledge exist. Also it multiplies likewise the benefits that man is capable to derive from the use of his mind.The enlarged body of knowledge that a division-of labor society makes probable is th e precondition for producing products and adopting methods of production that need more knowledge than any one person, family, village, or tribe can own. (Chandra, 166-168).A division-of-labor society is obviously indispensable for the production of all the wonderful products introduced over the last two centuries, from steam engines to rocketships. By the same token, it is equally indispensable for the ability to use modern, efficient methods of production in making goods that can be produced in modest quantities with little or no division of laborfor example, being able to use tractors and chemical fertilizers to help produce wheat.Closely related to the multiplication of the knowledge used in production is the fact that the division of labor makes possible a radical and progressive increase in the benefit derived from the existence of geniuses. In the absence of a division-of-labor society, geniuses, along with everyone else, must pass their lives in producing their own food, clo thing, and shelterassuming they are fortunate enough to have survived in the first place. Perhaps their high intelligence enables them to produce these goods somewhat more efficiently than do other people. But their real potential is obviously lostboth to themselves and to the rest of society.In contrast, in a division-of-labor society geniuses are able to devote their time to science, invention, and the organization and direction of the productive activity of others. Instead of being lost in obscurity, they become the Newtons, the Edisons, and the Fords of the world, thereby incalculably raising the productivity of every member of the division-of-labor society.The effect of a division-of-labor society is thus not only to increase the total of the knowledge that the same amount of human brain power can store and use, but also to bring that knowledge up to a standard set by the most intelligent members of the society. The average and belowaverage member of a division-of-labor society is enabled to produce on the strength of the intelligence of the most intelligent. Thus, in a division-of-labor society, people even of minimal intelligence are enabled to produce and obtain such goods as automobiles and television sets-goods which on their own they would not even have been able to imagine.And in each succeeding generation, geniuses are able to begin with the knowledge acquired by all the preceding generations, and then make their own, fresh contributions to knowledge. In this way, the knowledge and productive power of a division-of-labor society are able progressively to increase, reaching greater and greater heights as time goes on.In a division-of-labor society, not only productive geniuses, but everyone is enabled to concentrate on the kind of work for which he is best suited by virtue of his intellectual and bodily endowment. This principle applies to artistic and musical geniuses, to individuals with the kind of rare talents required to perform surgical opera tions or to be a champion athlete, on down to people whose special advantage may consist merely of such attributes as the possession of relatively keen eyesight or relatively great physical strength.As with productive geniuses, those with the potential ability to be great artists or musicians, great surgeons or athletes, or outstanding creators or performers of any kind, would not be able to realize their potential in the absence of a division-of-labor society. Because even if they managed to be born and reach adulthood, their time would be taken up with growing their own food and making their own clothing and shelter. In a division-of labor society, on the other hand, such individuals can realize their potential. And all the rest of mankind gains from itfrom being able to enjoy the art and music they create, from being able to live because of the surgical operations they perform, and from being able to have the pleasure of observing the feats they accomplish. (Perelman, pp 77-82)In a division-of-labor society, every productive advantage that individuals possess is likely to be put to use and to increase the productivity of labor. In a society of millions, hundreds of millions, or however many people, every person tends to focus on the specific things for which he is rationally and physically best suited. And therefore the production of everything tends to be carried on in the most proficient way it can be carried on in the circumstances. The production of everything tends to be carried on by those who can do it relatively best.All of the preceding discussion of the division of labor can be summarized by saying that the division of labor increases the efficiency with which man is able to apply his mind, his body, and his nature-given environment to production. It expands his capacity to store and use knowledge, which knowledge it raises to a standard set by the most intelligent members of society. This standard in turn tends to rise higher and higher in each s ucceeding generation, as creative geniuses again and again enlarge the stock of technological knowledge. The division of labor also increases the degree to which knowledge of production is assimilated, the yield to the time spent in acquiring it, and the efficiency with which it is disseminated. It increases the efficiency with which man applies his body to production inasmuch as it enables everyone to concentrate on whatever he is relatively best suited for by virtue of his bodily endowment. It also eliminates unnecessary motion in production. (Dumville, Torano, pp 166-175)On the basis of all of the foregoing considerations, it should be obvious that from the perspective of the production of wealth and all that depends on the production of wealth, a division-of-labor society is the form of society that is appropriate to mans nature. While man always possesses the faculty of reason, a division-of labor society is necessary if he is to use his rationality efficiently in production. I t is necessary if he is to actualize the productive potential provided by his possession of reason.It should be equally obvious that the existence of a division-of-labor society is to the material self-interest of every individual. Whoever, in the words of von Mises, prefers wealth to poverty and life and health to sickness and death, is logically obliged to value the existence of a division-of-labor society and all that it depends on. For it is the essential foundation of all significant wealth and of the vital contribution made by wealth to mans life and health. Take away a division-of-labor society, and production shrivels to the level of medieval feudalism, with its consequently recurring famines and plagues and resulting average life expectancy of twenty-five years-years, it should never be forgotten, whose passage was marked with cold, hunger, exhaustion, and pain. Apart from the amelioration provided by Western aid in the form of food and medicines, such continues to be the m iserable condition of human life today in all that vast part of the world that is not integrated into the division of labor.Thus, the widely held notion that life in society requires the sacrifice of the individuals self-interest is totally mistaken in regard to a division-of-labor society. That notion applies only to societies characterized by force and plunder, not to a division-of-labor society. A division-of-labor society represents the mutual cooperation of individuals for the purpose of achieving their own individual ends. The radical and progressive increase in the productivity of labor it brings about makes it possible for everyone to achieve his ends incalculably better within its framework than outside of it. (Gereffi, Korzeniewicz, pp 30-48).