Wealth of Nations: Book 1: Chapter 2: Of the Principle which gives Occasion to the Division of Labour

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. - Adam Smith (Book 1 Chapter 2)

Even Smith jumps into the great nature versus nurture debate way back in the 1770s! The chapter in brief basically outline man as the outlier among species in that we divide labor, and have a natural interdependence. Again he shows that everyone benefits from the division of labor, and makes the claim that in a society there isn't much difference between any two men. A common street porter or a philosopher aren't so different but by "habit, custom, and education."

To prevent this blog from becoming the longest book report I've ever written, I want to riff on this premise a bit. The Enlightenment in large part felt that any man could do anything if he put his mind and grit to it. We see similar sentiments displayed by Benjamin Franklin, Thomas Jefferson, and Thomas Paine. For America I think this notion of the everyman being a well of unlimited potential is intrinsic to the national character. One common theme we see in modern conservative discussion is that if you remove government restrictions, people can pull themselves up on their boot straps. But I'd like to see how Adam Smith would view that notion. In the above quote he acknowledges that education is key to a person's success in life. Thomas Jefferson was a strong proponent of state sponsored education, and I am interested to see if Smith holds the same basic position. If that is the case, then it could be argued that a strong capitalist society and a strong democracy can only succeed if the educational foundation is strong as well.

Wealth of Nations: Book 1: Chapter 1: Of the Division of Labor

The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labour. -Adam Smith

The case for a division of labor is rather intuitive. And I imagine even in Smith's time it was just done, but giving voice to the process probably hadn't been done before. Or at least not with an eye to the greater effects it would have. Smith lays out in detail the process necessary for the creation of a simple pin, and later a nail. He contends, and rightfully so, that by division of the task at hand into its basic and simple steps, greater volume of pins and nails can be produced. The worker whose job it is to sharpen the pin gets better at sharpening them, and work time is not lost as tasks switch in the production of the pins.

He also notes that as people specialize in their tasks, they also are more prone to find more efficient ways to do these tasks. An illustration of this point is done in the description of the fire engine of the day. Young boys were asked to regulate the cylinder and boiler by opening and shutting the valve. He notes that some boy longing to play with his friends, simply tied his valve to the lever on another part of the machine, he could remove himself entirely from the process and go play with his friends. This serves as a launching point into the nature of philosophy on a given subject. The division of labor allows for people to be around who don't need to do anything, but observe and perfect the process as a whole.

He concludes with a rather long list of all the far reaching tasks and jobs needed for a simple wool coat.

The woollen coat, for example, which covers the day-labourer, as coarse and rough as it may appear, is the produce of the joint labour of a great multitude of workmen. The shepherd, the sorter of the wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver, the fuller, the dresser, with many others, must all join their different arts in order to complete even this homely production. How many merchants and carriers, besides, must have been employed in transporting the materials from some of those workmen to others who often live in a very distant part of the country! How much commerce and navigation in particular, how many ship-builders, sailors, sail-makers, rope-makers, must have been employed in order to bring together the different drugs made use of by the dyer, which often come from the remotest corners of the world!

He goes on and on speculating on all the different things that go into the process. A real long thread of economic connectivity is displayed.

If anything this is an illustration of some basic points we all know. If you divide a task among people you can get more work done, or do the work faster. If I wash dishes by myself, I wash, then dry, then put away, but if I have a second person to dry and a third to put them away, we could improve efficient, reduce wasted time, and either finish faster promoting leisure for all, or do more dishes.

But a second more important thing to remember is that in any advanced society, the specialization is what allows us to have a greater quality of life. Imagine if you had to make your own stuff. From raw materials, how much could you do? Assuming you had a sheep and knew how to sheer it, would you be able to spindle the wool, and produce the yarn to make clothes? I'm guess not. But people divide their labor, specialize in it, get better and better at it, and excess is produced so even the lowest in an advanced society can enjoy things which the chiefs of primitive tribes wouldn't dream possible.

This brings me to a quote from the Freakonomics Blog about what the purpose of economics was. Nobel Laureate Gary Becker basically said it is to understand and to alleviate poverty. And when you think about it in that context you start to see how powerful a thing like the division of labor starts to be. If by specializing in one task, I can provide for a common welfare for more people(who are specializing in their tasks), then we collectively can raise the standard for all people within our society. My work specialization allows me certain luxuries and leisure I would not enjoy if I was required to do more by myself. But it also affords people much smarter than me, the ability to work on science and art to further our progress. And in turn that progress should allow my child (I only have one right now) to enjoy a greater standard of living. I think one theme that is often forgotten in the discussion of economics is the poverty angle and its effects. I hope in some way reading Wealth of Nations here, we can glean some perspective which can help us make sense of our current situation, and keep our values in check. A future project on Pancakes in the Age of Enlightenment may be Smith's other work The Theory of Moral Sentiments to help put some moral perspective on why we do what we do.

Wealth of Nations: Introduction and Plan of Work

In the introduction to the work, Adam Smith gives one basic contention about the overall productive nature of a society, namely that how much or how little a nation can produce is directly related towards its allocation of labor. He points out quite rightly, that a nation's wealth is basically untapped and unusable if there are no people there to exploit the resources and produce goods and services. Division of labor based on skills and judgment is key to exploiting the most production within a country. He also points out that because of that division you can have people who don't work at all enjoying relatively high standards of living because of the abundance of the nation's production.

The division of the book is also outlined. Book One is largely a discussion of how labor is divided, how wages and rents are determined. How profits work etc. Book Two is about financial systems. Book Three is about the rise of industry and the decline of agriculture since the fall of the Roman Empire. Book Four is a breakdown of the political economy of trade between nations. And Book Five is about the nature of taxation and fiscal policy. Of course he doesn't use those terms for half that stuff, but we'll see how it plays out.

I will say that the introduction is interesting in a historical context. He is describing things and concepts which now have concrete and defined terms. When he talks about the produce of a nation, we'd simply say GDP. It will get further interesting, to me at least, to see how he'll grapple with concepts like supply curve, demand curve, deadweight loss, or fixed and variable costs. Unfortunately this is only an introduction, and doesn't have much impact on how we view things in a modern context.

Embarking on an experiment..

Hello readers. This blog is an attempt to help me better myself by reading the classics that helped shape our modern world. And I hope apply their lessons to a modern context. While I am initially going to focus on works written during the Age of Enlightenment, I do reserve the right to explore other important works from other time periods. Don't be surprised if I read the Torah, Bible or Koran at some point. I will try to use Wikibooks as my source material so any readers who want to read along with me can keep up without having to rack up late fees at the library or buy copies at a great personal expense.

My first project is The Wealth of Nations by Adam Smith. This is considered one of the first major explorations into the field of economics and to be honest is something I was surprised I was not required to read in college with all the economics classes I took.