Division of Labor

The term division of labor refers to how the tasks associated with completing an economic activity — manufacturing a car, selling stocks, growing corn — are organized. Perhaps one of the most famous historical examples of this was outlined in Adam Smith's 1776 Wealth of Nations, in which he detailed how pin manufacturing was broken into 18 different operations, including drawing out the wire, straightening it, cutting it, pointing it, making the pin's head, and even putting the pin in its paper holder. Each of these operations was conducted as a separate, though interlinked, part of the larger process of turning rough metal into a finished product. For Smith, breaking the operation down into such specialized activities allowed a more efficient production system than if the process were organized so that each individual worker conducted all 18 activities. Such increased efficiency, Smith argued, resulted from three factors: (i) breaking up the production process allowed workers to specialize in particular activities and so become more effective in conducting them; (ii) workers could avoid wasting the time typically lost by having to switch from using tools appropriate for one part of the operation to tools more appropriate for a different part; and (iii) such specialization allowed for and encouraged the invention and deploying of a large number of machines which could make each individual worker more productive (Smith 1961/1776). Keywords: capitalism; marxist theory