Adam Smiths Division of Labour Theory
Adam Smith was a great Scottish economist, philosopher and author. He wrote a classic work on economics in 1776, entitled An Inquiry into the Nature and Causes of the Wealth of Nations. In his work, Adam Smith introduced the concept of the “division of labour” which has since become one of the most fundamental principles of economics.
The division of labour theory is based upon the idea of specialization in production. The theory suggests that production should be organized in such a way that instead of every individual producing goods and services required to meet their needs, instead every individual would specialize in producing only one specific goods or service in a high volume. For example, instead of a person growing their own food and then having to prepare their own meals, the person would specialize in growing food and then trade their goods with others for goods or services that they need.
Adam Smith acknowledged the increase in efficiency and productivity that could be achieved by specialization in production. For instance, Smith argued that specialization in production allowed for machines to be used to help with the production process. By having workers specialize in performing specific tasks and by utilizing machines to help automate the process, the production process becomes more efficient and the goods and services produced become more cost effective.
Adam Smith went on to argue that the division of labour allowed individuals to produce more in a given period of time. He noted that by specializing in one task, a worker becomes more adept at that task and can thus produce more in a given period of time. The increased efficiency of production further helps reduce the cost of production.
Adam Smith further argued that the division of labour leads to a better allocation of resources. He suggested that, when workers specialize and become experts in their respective fields, they become more attuned to the resource needs in their industry and are thus able to allocate resources more efficiently. This leads to an efficient allocation of resources and, by extension, increased productivity.
Adam Smith also argued that the division of labour leads to increased innovation. He argued that, when workers specialize in a certain task and become more adept, they gain greater insights into the process and are able to use their specialized knowledge to identify potential improvements or flaws in the process. This has the potential to lead to new innovations and advancements in the production process.
In summary, Adam Smith’s division of labour theory is one of the most fundamental principles of economics. It argues that by having workers specialize in a certain task, the production process becomes more efficient, cost effective and leads to increased productivity and innovation. These economic principles continue to be influential in today’s economy and many businesses employ specialists with the aim of increasing cost savings and productivity.
