Adam Smith Division of Labor Flashcards
What’s Smith’s main point on division of labor?
productivity increase leads to increased economic growth, but he leaves some important dependencies out e.g. between workers, amongst inventors, in the market place
Why was Smith into DOL?
because he and the Scottish Enlightenment were all about increasing productivity wanted more efficient industries, larger markets and more investment
Three arguments on how DOL improves productivity
1) improves dexterity
2) leads to time saving
3) propels invention
why the invention part of DOL sucks
“omission of the possibility of a group of people working on an invention is consistent with my view that some important potential dependencies are not considered”
what is the final argument that DOL leads to?
universal opulence, which extends to the lowest ranks of people. another argument where he forgets about dependence on others
Comparisons between animals and men
1) assertion that bartering/feelings is uniquely human
2) animals are independent of each other when grown to maturity - but men have constant need of help from each other, cannot expect this from everyone’s benevolence
3) animals get what they want by gaining favor of the other animals, men don’t always have time to do this
dependence issue in production
arrow and bow maker, because of specialization these are produced separately, but Smith doesn’t take into account that 100 bows aren’t helpful if there are only 10 arrows. Dependence again, but this time its faceless and in the market
Differences in natural talents
negligible, it’s the division of labor that leads to differences in men’s talents - point made again by comparing animals to men. *if we’re different we are necessarily dependent, but he doesn’t take that into account.
what is the extent of division of labor limited by?
the size of the market. if we have larger markets there will be higher demand for goods to produce more we need more refined division of labor, which is why he favored international trade, it increases the size of the market, demanding DOL and increased productivity.
water carriages
extend the market and are better than land carriages due to the former’s lower cost
summary of Smith on DOL
promoted and economy where impersonalized transactions among self-interested individuals take place. arguing market expansion would lead to economic prosperity.
negative consequences of division of labor
too much DOL can make people stupid and ignorant, they don’t develop skills. gave importance to public education because an ignorant population is bad.
