The Significance of Division of Labor in Adam Smith's Wealth of Nations

In the first three chapters of the book, The Wealth of Nations, by Adam Smith, the central question addressed is how division of labor resulted in man’s newfound capability to produce in quantities previously unattainable. Division of labor has resulted in an identical amount of work producing significantly more. This improvement is credited with the increased specialization of laborers, time saved from absence of the need to switch tasks, and increased technology. How division of labor came about is explained through human nature and market realities. Smith contends that human nature is to barter and to pursue making one’s surroundings more efficient. The practical realities are access to water-transport and the existence of bigger markets. In sum, the increase in production can be attributed to two traits of human nature and to two tangible realities.

One of the sources of the vast increase in the output of the individual laborer is human nature, which constantly strives to make its surroundings more efficient. This attribute is assumed by Smith and is elaborated upon in numerous examples. In an industrial environment benefitting from division of labor, each worker has a narrow lens through which he sees the world, forcing all his concentration onto the task at hand. The laborer has undergone extreme specialization and mastered a task which is one of a series of processes needed to manufacture, for example, a nail. This ecosystem coupled with the aforementioned attribute of human nature naturally results in the worker devising methods to do his task in a more efficient manner. Smith credits not only the great thinkers and philosophers for the various inventions which increased industrial efficiency, but also the simple worker for precisely this reason. To emphasize the intuitiveness of this pursuit, Smith describes a boy, responsible for the opening and closing of an essential valve on a fire-engine, who manages to automate his task by tying a string to the various elements of the valve. The latter made his life easier and allowed him time to play with his friends. This example, while seemingly trivial, emphasizes the outlook endowed upon those whose work is extremely specialized. In sum, the human urge to streamline has naturally led to the division of labor.

Continuing his thought of the influences of human nature on the division of labor, Smith elaborates on the significance of the instinct to barter. Multiple ideas are raised as to what is the reason for such an attribute and why it is unique to man. An explicit acknowledgement of human uniqueness in speech and ability to reason is used as a possible explanation. In contrast, animals never barter and have never been observed partaking in any form of exchange. Additionally, a typical fully-grown animal does not rely on any other creature for his wellbeing, whereas humans in modern society are precisely the opposite. A human is constantly required to interact and rely on other people. Furthering the logical flow of these ideas, is the assumption that like animals, humans act purely in self-interest, and that this is the basis for mankind’s utilization of bartering. Through bartering man can obtain what he desires by convincing the other that it would behoove him to accept what is offered. This is proved by Smith through an extreme example of a beggar, wholly reliant on others’ compassion, who too barters, when exchanging that which he has received for other goods which he requires. The latter disposition is the root of the creation of division of labor. To emphasize the instinctiveness of the matter, Smith uses another example to prove the solidity of his claim. Even a tribe of huntsman partake in the division of labor. They barter their various skills to their fellow tribesmen whether it be in manufacture of weaponry, homes, or clothing. Through taking mankind back to its prehistoric roots, Smith effectively shows that human nature is the source of the need to barter and not any other external factor or influence. Through this simple yet effective method, one can easily trace human activity from its roots in a tribal economy, to the current, highly developed economy with endless opportunities to barter unique goods and skills.

Smith does not naively credit aspects of human nature as solely responsible for the development of the division of labor. The tangible realities of market size and natural factors, which surrounded humans in certain areas of the world, served as catalysts to the progress of this division. Smith puts it very plainly: specialization can only occur if there are enough people who can benefit from this individual’s sole toil. This is a very logical fact, yet he nonetheless elaborates thoroughly to prove it, using the Scottish Highlands as an example. In addition to demand and consumers in the vicinity of a specialized worker, transportation of goods also serves an essential role. Smith compares transport of goods over land to that of over water. Through detailing the expenses and inefficiencies of horse-drawn wagon transport to the efficiencies of water transport, in terms of speed, labor costs, depreciation of infrastructure, risk, and amounts of goods able to carried in either method, it is empirically proven that water transport is far superior to that of land transport. However, what are the results of this fact and how does it connect to the rest of the argument? In essence, water transport allows specialized workers to provide their goods to other markets in a way that land transport is incapable of doing. Smith concludes that areas of the world which first implemented division of labor were ones with easy access to ports and waterways, whether it be Egypt, India, China, Holland, or Greece. Therefore, the significance of market size and water transport are shown to be essential in the development of division of labor.

On one hand, Smith eloquently details the fruits of the division of labor and the material opulence it has brought to modern society, but fails to address the significance of individual rights. Furthermore, the claim that the opulence obtained through industrialization is ‘diffused’ in society is particularly unfounded. It may be true that in an industrialized society the working class will have more, in contrast to that of a purely agrarian society, but it does not mean that the wealth is distributed in a fair or just fashion. The United States’ Founding Fathers wrote of inalienable rights and the right to life, liberty and the pursuit of happiness. In my view, there are elements of life that bear more significance than owning more or living in more opulent conditions. Smith strictly addresses the utility of goods. The utility of meaning and self-worth are immeasurably greater than the utility of a fancier garment or other material objects. Smith assumed that a worker only desires good living conditions, proving so through stating his living conditions are better than an African king. This is too narrow an approach to the nature of mankind. The sole desire of man is not to satisfy an insatiable thirst to consume goods. Making a simple industrial or manufacturing operation the sole employment of a man’s life, as Smith states, is not a recipe for meaning. I cannot decisively refute any claim that capitalism is an overall force for good, but what is apparent is that additional aspects of human nature must be taken into account when discussing the utility of the division of labor.

In conclusion, Smith explains the history, source and byproducts of the division of labor. The many claims made are reinforced with detailed examples, evidence, and empirical observations. Some, assumptions which are made regarding human nature’s tendency to strive for efficiency, slothfulness in pre-division of labor, and the fact that humans only act in self-interest, are not effectively proven. For the most part, however, the claims made are systematically proven through a diverse set of observations and historical examples. Therefore, the question of how division of labor has resulted in the increase of production is addressed and sufficiently answered.