Wealth of Nations, Chapter 1


Maximum productivity is achieved when a task is divided up into sub-tasks and individuals specialize in a sub-task.

Example of Division of Labor

The task of making a pin can be divided up into these sub-tasks:

  1. One man draws out the wire
  2. Another straightens it
  3. A third cuts it
  4. A fourth points it
  5. A fifth grinds it at the top for receiving the head
  6. Making the head requires two or three operations
  7. Putting on the head is a peculiar business
  8. To whiten the pins is another

Example Productivity

A person performing all tasks himself could make perhaps 20 pins in a day. Thus 10 men could produce 200 pins in a day.

When each man performs only one sub-task, the 10 men working together can collectively produce 48,000 pins in a day. By dividing up the labor there is a 250-fold increase in productivity.

Universal Increase in Productivity

Regardless of the problem, the effects of the division of labor are similar to what they are in the above example.

Manufacturing and Farming

Manufacturing is generally more amenable to subdivision of labor than is farming. Consequently, improvement in the productivity of farming does not always keep pace with their improvement in manufacturing.

In agriculture, the productivity of the rich country is not always much more productive than that of the poor country. The corn of the rich country, therefore, will not always come cheaper to market than that of the poor.

Reasons for Enhanced Productivity

  1. Increased dexterity in every particular workman
  2. Saving of time, which is commonly lost in passing from one species of work to another
  3. Machines can be more easily built which perform a single, simple task, than performing multiple, complex tasks

Divide Knowledge for Productivity

Like every other employment, knowledge is subdivided into a great number of different branches; this subdivision improves dexterity, and saves time. Each individual becomes more expert in his own peculiar branch, more work is done upon the whole, and the quality of knowledge is increased by it.

Increased Productivity Leads to a Wealthy Society

As a consequence of the division of labor, there is a great multiplication of productions.

Thus, every workman has a great excess above and beyond his needs, with which he is able to trade.

Thus, the excess diffuses itself through society.

division of labor --> high productivity --> much to trade

Countless Laborers Needed

The number of people needed to produce even a simple item exceeds all computation.

Consider a woolen coat. It is the produce of the joint labor of a great multitude of workmen:

Consider only what a variety of labor is requisite in order to form the shears with which the sheperd clips the wool:

If we examine all the things in a household, and consider what a tremendous variety of labor was employed, we shall recognize that without the assistance and cooperation of many thousands, even the simplest household would not be possible. In civilized society man stands at all times in need of the cooperation and assistance of great multitudes.