Some cool Examples from the father of economics that every economics student must know (Part 1)

Division of Labour

It simply means separating a piece of work into different smaller tasks, all done by different people or groups of people

Adam Smith, in his 1776  Magnum Opus, "An Inquiry into the Nature and Causes of the Wealth of Nations" gave us several real-life examples of this concept. I'm reproducing a few down below:

• Pin-maker 

  A pin-maker, who has no knowledge of division of labour and hence does not use it, can at most make only between one to twenty pins. But when there is a division of labour and the same job of making pins is divided into different subtasks, “where one man draws out the wire another straightens it, a third cut it, a fourth points it, a fifth grinds it” and so on into eighteen or so different branches, all “performed by distinct hands”, a small factory can make up to 12 pounds of pins (1 pound contains more than 4000 pins)

• Discovery of the engine boy (Innovation and improvement through division of labour)

  In the past, to run a steam engine, the operators had to alternatively open and shut the channel between a boiler and a cylinder. A person was employed to do just this work. However, one fine day, an engine boy connected the valve that opened this channel to a different part, by the movement of which the channel could now open and close as is needed, without a person having to do it. This innovation, according to Smith, is the most revolutionising since the invention of the steam engine.

• The woollen coat of the day-labourer (even the most trivial of things need a thousand different hands to make)

  To make a simple woollen coat of the day labourer, the process involves hundreds and thousands of people, from a shepherd to wool comber, dye maker, the dyer, the spinner, the weaver, the dresser, merchants, carriers, workmen in commerce and navigation, sailors, sailmakers, shipbuilders so on and so forth. In short, even the most simple articles need the “cooperation of many thousands”.

This edition of econSHOT is proofread by Elizabeth. The thumbnail art is designed by Alana Riju.

If you enjoyed reading this article, please feel free to share this in your network. Please don’t forget to follow us on LinkedIn, Instagram, Twitter, Facebook, YouTube and our website.