1.1.5. Specialization and the devision of labour Flashcards
Define Division of Labour
Occurs when the work is split up into small tasks
Define Specialization
Occurs when each worker is completes a specific task in a production process
Adam Smith and the Division of Labour
In The Wealth Of Nations Adam Smith set out the view that economic growth could be achieved by increasing the devision of labour. This involved the breaking down of a task into many small jobs with workers specializing in a particular task without the need to change jobs during the day. This saved time and enabled each worker to become expert in that task so increasing his or her productivity
Advantages of Specialization and the Division of Labour in Organizing Production
The following factors help to explain why the devision of labour has been widely adopted:
- Each worker specializes in tasks for which he/she is best suited
- Therefore, he/she only has to be trained in one task
- Less time is wasted because a worker no longer has to move from one task to another
- In manufacturing such an approach enables production line methods to be employed and allows an increased use of machinery
- In turns, this helps to increase productivity and to reduce average costs of production
Disadvantages of Specialization and the Division of Labour in Organizing Production
Despite the advantages, certain problems are associated with the Devision of Labour including:
- Monotony and boredom for workers: this could result in a decrease in productivity
- Loss of skills: workers trained in one particular task have only limited skills. This could be a problem if they are made redundant
- A strike by one group of workers could bring the entire production facility to standstill
- There is a lack of variety because all goods produced on a production line are identical
Advantages of Specialization to Trade
If a country specializes in the production of certain goods and services and then trades these exchange for goods and services that it does not produce, then it can benefit from increased output, greater choice and lower prices
Disadvantages of Specialization to Trade
Such specialization might mean that a country becomes over-dependent on imported goods and services. If its goods and services are uncompetitive then unemployment could result, and the country’s value of imports may persistently exceed the value of its exports
Limits to the Division of Labour
Certain factors will limit the extent to which the Division of Labour can be applied:
- The size of the market: if there is only a small market then it will be more difficult to specialize
- The type of the product: for example, designer fashion products are likely to be unique and not suitable for the Division of Labour
- Transport costs: if these are high then large-scale production and the Division of Labour may not be possible
What is Money?
Refers to anything that is used as a means of exchange for goods and services
What are the key Functions of Money
- As a medium of exchange: enabling people to specialize, exchanging the money earned from doing a specialist job for the goods and services they wish to buy
- A store of value: enabling people to save in order to buy goods in the future
- A measure of value: enabling people to assess the value of different goods and services
- A means of deferred payments: enabling people to buy goods and pay for them on credit
TEST YOURSELF - explain the importance of money as a medium of exchange
Money enables a person to work in a highly specialist job. The money he/she is paid in can then be used to buy other goods and services
