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Adam Smith

Adam Smith on division of labor

Call me an idealist but I agree with the enlightenment philosopher Adam Smith when it comes to people’s abilities. I believe the effects of the division of labor, education, and character are responsible for a person a lot in life and not a genius or genetic ability. It is a fairy-tale and lies of some modern academics to attribute too much emphasis on innate ability or genetics and not education and character.

Believe me, I have had enough experience in business to see the arrogant proclaim themselves a genius. However, it is a real genius like Adam Smith who can explain the reason for success more clearly, than any modern academic, or big headed corporate warrior.  Adam Smith wrote that division of labor, education, and character, not genetics is what is important.

Adam Smith on the division of labor

Adam Smith writes more eloquently than I so here is his quote.

The difference of natural talents in different men, is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature, as from habit, custom, and education. When they came in to the world, and for the first six or eight years of their existence, they were, perhaps, very much alike, and neither their parents nor play-fellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance.

This is the division of labor according to Adam Smith. This is how Adam Smith saw why some people are rich and others are not.

How can it make more clear? We all add up to 100% and our work and character bring us talent and not the other way around.  Marcus Aurelius wrote ‘character is destiny’. I do not know why people have forgotten this and are blaming everyone else for problems and expecting the government to take the lead in fixing them.

Market and division of labor

In the Wealth of Nations Smith went on to comment on how specialization of labor was limited by market conditions.

When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for.

With globalization, this no longer applies to a modern economy and people with the Internet. It is more about developing a specialization that will pay.

If you want to make money and have a successful life try specializing in something that is a high paying profession. Instead of digging ditches or pushing the paper in the office, try to develop a niche skill and market it. I do not think school is the best way to develop your specialization, but rather just buy a book and learn it yourself.  I am a big believer in the ideal of the enlightenment and clear courageous thinking like the philosophy of Adam Smith. The classics really do contain the keys to living a better life and work.

By Mark Biernat

Mark Biernat - I write about frugality on the expense side and revenue generation ideas on the income side which can be applied to the country as a whole or your home economy.
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3 replies on “Adam Smith on division of labor”

After your first citation to Adam Smith’s remarks on divsion of labor, you conclude that people are “expecting the government to fix the problems”, when, according to you, it makes absolutely no sense to do so. However what you fail to have understood is that Smith, as per your citation of his remarks on division of labor, is making an argument against it, and not for it when he says- “The difference of natural talents in different men, is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause, as the effect of the division of labour.” When he says- “very different genius which appears to distinguish men of different professions…is not…so much the cause of division of labour”, he means that the differences in natural ability among various individuals is not so great as to be something that could lead to division of labor. In other words, it’s by no means, a natural phenomenon. On the contrary it’s an artificial thing. This is what he means when he says- “not upon many occasions so much the cause, as the effect of the division of labour.” In other words, because of this artificially created system called “division of labor”, the economy effected a stark rise in achievement gap, and sharper differences in equality of outcome, among different persons, undertaking different professions.
In short, division of labor, which is a man-made system of hierarchy, LEADS TO vastly different results among men. And therefore, in a just and equitable society, the government ought to intervene to cushion the impact that is to be felt by the majority who are at a disadvantage, by the existence of the excesses of division of labor.

Mark Biernatsays:

Why the government? Government are people too and their social designs history shows is usually worst then free individuals with free choice and liberty making choices. If a person does not want to be in a division of labor economy they are always free to homestead. Many people do. But for government planners to take over, is a road that mankind had been down many times and it does not end well.

Rahul Agarwalsays:

I didn’t say anything about planning in my last reply. In fact, I’d say that planning is ineffcient either by the gov’t or by a cabal of of wealthy capitalists. I merely talked government intervention. Adam Smith was all for it, if it favored the workman. Smith made some important points on regulation. For instance, this- “Whenever the law has attempted to regulate the wages of workmen, it has always been rather to lower them than to raise them.” Here, he is against it, since it favors the employers.

In another instance, he says- “Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters. Thus the law which obliges the masters in several different trades to pay their workmen in money and not in goods, is quite just and equitable. It imposes no real hardship upon the masters. It only obliges them to pay that value in money, which they pretended to pay, but did not always really pay, in goods.” (Book I, Chapter X, Part II). Would you call this planning too?

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